California Billionaire Tax Sparks Debate Over Belonging

Wealthy residents feel unwanted, but data shows the state's tax system favors the ultra-rich.

Published on Feb. 1, 2026

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A proposed 5% wealth tax on California billionaires has sparked debate over whether the state's tax system is truly punishing the ultra-wealthy. While some billionaires like Don Hankey have claimed they feel "unwanted" and have moved out of state, data shows the state's tax code actually provides significant advantages for the richest residents, including low effective tax rates and generous property tax breaks. Experts argue the wealth tax could help address growing inequality, which both the left and right agree is a threat to economic and political stability.

Why it matters

The debate over the California billionaire tax highlights the complex relationship between the ultra-wealthy and their communities. While billionaires may feel socially unappreciated, the data shows the state's tax system is quite favorable to them. Addressing wealth inequality through measures like a wealth tax could help create a greater sense of community belonging, which research shows is a core human need.

The details

The proposed 5% wealth tax on California billionaires would apply to those with a net worth over $1 billion. However, economists note that the state's existing tax code already provides significant advantages for the ultra-wealthy, including low effective tax rates due to strategies like "buy, borrow, die" that allow them to avoid paying taxes on their wealth. Additionally, California's lack of a state estate tax and property tax breaks like Proposition 13 disproportionately benefit high-net-worth individuals. Despite the high marginal tax rates, the state's tax system is quite favorable to billionaires.

  • The California 5% Billionaire Tax Act was proposed in 2026.

The players

Don Hankey

A Los Angeles billionaire who moved to Nevada after California proposed the new 5% wealth tax, citing a feeling of being "unwanted" in the state.

Gavin Newsom

The Governor of California who has so far opposed the Billionaire Tax Act, citing concerns that many billionaires will leave the state.

Stephanie Grier

A 65-year-old California resident caring for two grandchildren with intellectual disabilities, who fears Medi-Cal cuts will make her situation "impossible."

Ray Dalio

A hedge-fund founder who has linked wealth inequality to political instability.

Bernie Sanders

A U.S. Senator who has also warned that extreme wealth inequality is a threat to society.

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What they’re saying

“I just felt a little bit like I wasn't wanted.”

— Don Hankey (Forbes)

“The increased wealth and values gaps lead to increased populism of the right and populism of the left.”

— Ray Dalio, Hedge-fund founder (Financial Times)

“A society cannot sustain itself when so few have so much while so many have so little.”

— Bernie Sanders, U.S. Senator (2022 statement)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.