California's 'Billionaire Tax' Proposal Sparks Concerns

Even if rejected by voters, the measure could drive wealthy residents out of the state.

Published on Feb. 14, 2026

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California is heavily dependent on tax revenue from its wealthiest residents, with the top 1% paying 40-50% of all income taxes. However, a proposed 'Billionaire Tax' measure sponsored by the SEIU union aims to levy a 5% tax on billionaires' net worth, even on assets they don't fully own. Experts warn this could drive the state's ultra-wealthy, like tech entrepreneurs, to leave California, costing the state crucial tax revenue for decades to come.

Why it matters

California's reliance on the wealthy for a large portion of its tax base makes any policies that could drive them away a major fiscal risk. The 'Billionaire Tax' proposal is seen as particularly problematic, as it could tax people on assets they don't fully own, potentially violating legal precedents.

The details

The 'Billionaire Tax' measure would impose a one-time 5% levy on the net worth of California's billionaires, retroactive to January 1, 2026. However, the proposal also includes a provision that would allow the state to tax people based on how much of a company they control, rather than how much they actually own. This could result in much higher tax bills for tech entrepreneurs like DoorDash's Tony Xu, who owns only 2.6% of his company but controls 57.6% of shareholder voting power.

  • The 'Billionaire Tax' measure is proposed to take effect on January 1, 2026.
  • The measure would be retroactive to January 1, 2026 if it passes.

The players

Gavin Newsom

The Governor of California, who has warned against the risks of the 'Billionaire Tax' proposal.

Service Employees International Union (SEIU)

The union that is sponsoring the 'Billionaire Tax' measure.

Tony Xu

The founder of DoorDash, who could be heavily impacted by the 'Billionaire Tax' proposal due to his high level of voting control over the company despite owning a minority of shares.

George Skelton

A columnist for the Los Angeles Times who has called for lowering California's reliance on taxes from the very wealthy.

Larry Page, Sergey Brin, Peter Thiel

Tech billionaires who have already left California, costing the state crucial tax revenue.

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What’s next

The 'Billionaire Tax' measure must first make the November 2026 ballot in California and then be approved by voters before it can take effect.

The takeaway

California's heavy reliance on tax revenue from its wealthiest residents makes any policies that could drive them away a major fiscal risk. The 'Billionaire Tax' proposal is seen as particularly problematic, as it could violate legal precedents and accelerate the exodus of the state's ultra-wealthy, costing California crucial tax revenue for years to come.