A Wealth Tax Floated in California Has Billionaires Thinking of Leaving (Gift Article)

It’s uncertain whether the proposal will reach the statewide ballot in November, but some billionaires like Peter Thiel and Larry Page may be unwilling to take the risk.

Billionaires including Peter Thiel, the tech venture capitalist, and Larry Page, a co-founder of Google, are considering cutting or reducing their ties to California by the end of the year because of a proposed ballot measure that could tax the state’s wealthiest residents, according to five people familiar with their thinking.

Mr. Thiel, 58, who owns a home in the Hollywood Hills and operates a personal investment firm from Los Angeles, has explored opening an office for that firm, Thiel Capital, in another state and spending more time outside California, three of the people said.

Other billionaires who appear to be making moves to decrease their presence in California include Mr. Page, 52, a longtime resident of Palo Alto. He has discussed leaving the state by the end of the year, according to two people briefed on the talks. In mid-December, three limited liability companies associated with Mr. Page filed documents to incorporate in Florida, according to state records.

The moves are being driven by a potential California ballot measure from the health care union, Service Employees International Union-United Healthcare Workers West, the people said. The proposal calls for California residents worth more than $1 billion to be taxed the equivalent of 5 percent of their assets.

If the measure gains enough signatures to reach the state ballot in November and wins approval, it will retroactively apply to anyone who lived in California as of Jan. 1, 2026. Those with $20 billion in assets who resided in the state on that date would face a one-time tax of $1 billion and have five years to pay it, according to the terms of the measure.

Whether the proposal will reach California’s ballot is far from certain, but some billionaires may be unwilling to take the risk. For Mr. Page, whose net worth is estimated at $258 billion, the measure could result in a one-time tax of more than $12 billion. The tax bill for Mr. Thiel, whose net worth is around $27.5 billion, could be more than $1.2 billion.

Representatives for Mr. Page and Mr. Thiel did not respond to requests for comment.

The potential wealth tax is under debate as the income divide in the United States becomes increasingly stark. Recent data from the Congressional Budget Office showed that income inequality increased over a 33-year period ending in 2022, with the share of wealth held by families in the top 10 percent at around 69 percent, while the share held by families in the bottom 50 percent at just 3 percent.

In California, the S.E.I.U.-U.H.W. has said the proposed tax measure could raise up to $100 billion from about 200 billionaires. The money could be used to offset federal budget cuts, the union has said.

Suzanne Jimenez, the chief of staff at S.E.I.U.-U.H.W., said the organization was trying to fill a funding gap for the state’s health care industry. “We looked at how could we generate the revenue to fix this kind of hole, and this group of folks just made sense,” she said, adding that California billionaires were the “most fortunate people in this state.”

The measure faces opposition from Silicon Valley investors and others, including Gov. Gavin Newsom. At The New York Times DealBook conference this month, Mr. Newsom said a wealth tax was not pragmatic. The Democrat, who has been close with people like Mr. Page, is raising money for a committee to oppose the measure. The committee received a $100,000 donation from the venture capitalist Ron Conway in November, according to state campaign finance records.

California’s Legislative Analyst’s Office and Department of Finance have estimated that the state “would collect tens of billions of dollars from the wealth tax” in onetime payments. But they added that state income tax revenues would also fall over the long term by hundreds of millions a year if billionaires decided to move away.

A spokesman for Mr. Newsom said he continued to oppose “state-level wealth taxes” because they encouraged those who would be affected to move to another state.

“The inevitable outcome will be an exodus of the state’s most talented entrepreneurs who can and will choose to build their companies in less regressive states,” Chamath Palihapitiya, a tech investor, said on social media this week. He also posted that he was giving “serious consideration” to a move to Texas.

David Lesperance, a tax and immigration adviser for high net-worth individuals, said it would be a “process” for people to successfully claim nonresidence in a state. California’s tax agency is known for its aggressive pursuit of revenue and considers many factors to assess whether individuals are domiciled in the state, including their principal residence, voter registration, driver’s license information and locations of their banks, investments and family members.

Because of the potential ballot measure, “almost all of my clients are taking steps as quickly as possible both to sever California residence and to move assets outside of the state,” Mr. Lesperance said in an email.

Brett Harris, a high-end real estate agent in the Miami area, said he had been contacted recently by five California billionaires who planned to make Florida their home so they could “offset their risk of exposure to the billionaire tax.” He added that if the proposed measure did not pass, the billionaires “may end up moving back to California.”

Mr. Page, who founded Google in 1998 with Sergey Brin when they were Stanford University students, has kept a low profile since stepping down from his day-to-day management role at Alphabet in 2019. He has spent time overseas and worked on personal projects related to artificial intelligence, according to a person briefed on his activities.

Mr. Page and the head of his family office, Wayne Osborne, have recently informed people that Mr. Page is looking to leave California, two people familiar with the discussions said. Mr. Osborne has been recently spending time in Miami, one of the people said. Mr. Osborne did not respond to requests for comment.

The three limited liability companies that are associated with Mr. Page and that incorporated in Florida this month are managed by Assumption L.L.C., a parent company that works with Mr. Page’s investments and his family office, called Koop. Tina Rosado, who represents Assumption and filed the Florida paperwork, did not return requests for comment.

Mr. Thiel, who made a fortune from investing in tech companies like Facebook and Palantir, has supported the conservative anti-tax group Club for Growth and placed many of his early tech stakes in a Roth I.R.A., an individual retirement account that allows investments to grow tax-free. In recent years he established a residence in Miami and registered to vote in Florida, according to state records. He has also obtained citizenship in New Zealand and explored citizenship in Malta.

This month, Mr. Thiel held a Christmas party at his Hollywood Hills mansion, where guests talked with him about the implications of the potential California ballot initiative, said two attendees, who were not authorized to speak publicly. The party’s theme was all things Britain, the country that American revolutionaries revolted against in 1775 over taxation.

Georgia Gee, Kirsten Noyes and Sheelagh McNeill contributed research.

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