California’s wealthiest residents are racing to outmaneuver a proposed tax that would take a one-time slice of their fortunes, and the planning is reshaping where they live, how they hold their assets, and which lawyers they keep on retainer, the Wall Street Journal reported this week.
The measure is the 2026 California Billionaire Tax Act, headed for the state’s November 3, 2026 ballot after the union behind it, SEIU-United Healthcare Workers West, submitted roughly 1.55 million signatures on April 27. It would impose a one-time 5% tax on the net worth of any Californian worth $1 billion or more, with the money — an estimated $100 billion — aimed largely at filling holes left by federal cuts to health-care funding.
The detail driving all the maneuvering is the timing. The tax keys off whether someone was a California resident on January 1, 2026, while their net worth is measured on December 31, 2026. In plain terms, you had to already be gone before this year began to cleanly escape it. Moving in the middle of 2026 doesn’t change the residency call. That design was deliberate — the authors built it as a one-time levy with a backward-looking snapshot precisely to make fleeing harder.
A wave of billionaires tried to beat the clock anyway. Reported departures before the deadline include Alphabet co-founders Larry Page and Sergey Brin, Meta chief Mark Zuckerberg, venture investors Peter Thiel and David Sacks, and former Uber CEO Travis Kalanick, with exits aimed at no-income-tax states like Texas, Florida, and Nevada. By one analysis tied to the California Tax Foundation, the three richest names alone account for a large share of the state’s billionaire wealth.
Here’s the creative part. Many of those who left in late 2025 or are leaving now are betting on the courts. Tax lawyers argue the measure’s residency rule is constitutionally shaky because it tries to tax people based on where they lived on a single past date, which may collide with the right to travel between states established in cases like Saenz v. Roe. If a court strikes that provision, a 2026 departure could still spare them some or all of the bill. So “leaving” isn’t just relocation — it’s a wager that the snapshot won’t survive a legal challenge.
For those staying put, the planning shifts to how assets are held. The tax covers worldwide holdings — businesses, stocks, bonds, art, collectibles, intellectual property — but carves out exceptions that advisers are working hard to navigate. Real estate owned directly or through a revocable trust is excluded, yet property held inside an LLC, which is how many wealthy families structure it, may not qualify, so some are restructuring ownership. Tangible items like a valuable painting can be excluded if kept outside California for at least 270 days in 2026 — unless the move was clearly staged to dodge the tax. There are also smaller carve-outs: up to $5 million for miscellaneous assets and up to $10 million in Roth-style retirement money. Estate planners are also reworking trusts, since the measure contains complex rules for when a trust’s assets count as a beneficiary’s own.
Underneath it all is the loophole the tax is really chasing, sometimes called “buy, borrow, die.” Because the United States taxes investment gains only when assets are sold, a founder sitting on appreciated stock can borrow against it to fund a lavish lifestyle and never trigger income tax. A wealth tax sidesteps that by taxing the holdings themselves rather than waiting for a sale.
Supporters say the avoidance fears are overblown. The union and allied analysts argue the comprehensive base and one-time structure leave little room to hide, and that splashy departure announcements are partly theater meant to scare voters. A working paper from the National Bureau of Economic Research found California billionaires paid about $4.1 billion in income tax last year — roughly 0.2% of their combined net worth — and calculated that even if every billionaire vanished overnight, it would take 25 years for the lost income-tax revenue to equal what the wealth tax would raise in five.
Critics, including the Tax Foundation and conservative analysts, counter that the measure invites years of litigation and accelerates an exodus of capital already underway. Reaction among the wealthy is split: LinkedIn co-founder Reid Hoffman called the idea “horrendous” for innovation, while Nvidia chief Jensen Huang said he is “perfectly fine” with it.
The bigger business story is the cottage industry it has created. Wealth managers, trust attorneys, and residency-audit specialists are booked solid, and the fight will likely outlast the November vote — both sides expect a court battle no matter the result. For other states eyeing their own billionaires, California is about to become the test case for whether a wealth tax can actually be collected, or just chased.
JBizNews Desk — California
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