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The threat of a new billionaire tax in California has triggered a wave of wealthy residents heading for the exits. And according to famed venture capitalist Chamath Palihapitiya, that exodus won’t slow down as long as the proposal remains on the table — with potentially severe repercussions for everyone else who calls California home.
“More calls from friends. The total wealth that has left California is now $1T,” Palihapitiya wrote in a recent post on X (1).
“We had $2T of billionaire wealth just a few weeks ago. Now, 50% of that wealth has left — taking their income tax revenue, sales tax revenue, real estate tax revenue and all their staffs (and their salaries and income taxes) with them.”
The proposed billionaire wealth tax is a ballot initiative backed by the Service Employees International Union – United Healthcare Workers West (SEIU-UHW), which represents more than 120,000 health care workers and patients. If enacted, it would impose a one-time 5% tax on the wealth of the state’s billionaires.
The measure would apply to assets including businesses, securities, art, collectibles and intellectual property, while excluding real estate and certain pensions and retirement accounts.
According to the California attorney general’s summary of the initiative, these wealth tax revenues would “probably” add up to tens of billions of dollars spread over several years (2).
Palihapitiya sees things very differently. In his view, California’s finances will worsen dramatically because many billionaires will simply leave — taking tax revenues and jobs with them.
“California billionaires were reliable tax payers…. They were the sheep you could shear forever. Now California will lose this revenue source FOREVER,” he wrote, warning that the state’s budget deficit “will explode.”
“Unless this ballot initiative is pulled, we will not stop the billionaire exodus. With no rich people left in California, the middle class will have to foot the bill.”
With January 1, 2026 set as the cutoff date to avoid a potential 5% wealth levy, several high-profile billionaires have already made moves.
According to the New York Times, Google co-founder Sergey Brin shifted a significant portion of his business out of the state in the 10 days before Christmas: An entity linked to Brin terminated or relocated 15 California LLCs overseeing his investments (3).
That follows similar steps by fellow Google co-founder Larry Page, who has also cut ties between California and many of his assets, Business Insider reports (4).
Meanwhile, Peter Thiel — the PayPal co-founder and early Facebook investor who built much of his fortune in California — announced just before the new year that he opened a new office for his investment firm in Miami (5).
Whether America’s ultra-rich are paying their fair share of taxes has long been debated. And the campaign website for the proposed California billionaire tax makes its case plainly: “About 200 people … together hold $2 trillion in wealth, most of which will never be taxed in their lifetimes due to loopholes in state and federal tax laws (6).”
The blunt reality is that billionaires build their wealth through assets — not wages; as the value of these assets rises, their net worth grows. However, the U.S. tax system isn’t designed to fully capture those gains. Capital gains are typically taxed at lower rates than regular income and taxes aren’t owed until the assets are sold.
In fact, Scott Galloway, professor of marketing at New York University’s Stern School of Business, once said that if you’re trying to build wealth, you have “an obligation to pay as little tax as possible.”
His advice? Keep it simple: “You buy stocks, you never sell them, you borrow against them.”
Galloway broke it down with an example: “You own $100 in Amazon stock. You need money to buy something. Instead of selling the stock and let’s say it’s gone up 50% … You would have to realize a capital gain and pay long-term capital gains [tax] on that $50 gain. No, just borrow against it and let the stock continue to grow.”
This strategy allows investors to tap into the value of their portfolios without triggering a taxable event. Because capital gains are only taxed when realized, borrowing against appreciated assets lets investors access cash while deferring taxes.
Meanwhile, the investments themselves can continue to grow. And since the interest on the loan is often smaller than the tax bill from a sale, this approach can be a powerful tool for preserving and compounding wealth over time.
Of course, consistently picking winning stocks isn’t easy — and you don’t have to do it. Warren Buffett, one of the most successful investors of our time, recommends a simpler approach: Just buy the S&P 500.
“In my view, for most people, the best thing to do is own the S&P 500 index fund,” Buffett has famously stated (7). This straightforward approach gives investors exposure to the top American companies on the stock market, providing diversified exposure without the need for constant monitoring or active trading.
The beauty of this approach is its accessibility — anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time with tools like Acorns, a popular app that automatically invests your spare change.
Signing up for Acorns takes just minutes: Link your cards and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and, if you sign up today with a recurring investment, Acorns will add a $20 bonus to help you begin your investment journey.
Real estate has long been another go-to asset for building wealth — and one of the reasons is the generous tax treatment it receives.
When you earn rental income from an investment property, you can claim deductions for a wide range of expenses, such as mortgage interest, property taxes, insurance and ongoing maintenance and repairs.
Real estate investors also benefit from depreciation — a tax deduction that recognizes the gradual wear and tear of a property over time. Investors can also use tools like refinancing and 1031 exchanges to keep their capital compounding instead of cashing out.
Today, you don’t need to be a millionaire or buy property outright to benefit from real estate investing. Crowdfunding platforms like Arrived offer an easier way to get exposure to this income-generating asset class.
The process is simple: Browse a curated selection of homes that have been vetted for their appreciation and income potential. Once you find a property you like, select the number of shares you’d like to purchase and then sit back as you start receiving any positive rental income distributions from your investment.
Another option is First National Realty Partners (FNRP), which allows accredited investors to diversify their portfolio through grocery-anchored commercial properties without taking on the responsibilities of being a landlord.
With a minimum investment of $50,000, investors can own a share of properties leased by national brands like Whole Foods, Kroger and Walmart, which provide essential goods to their communities. Thanks to triple net leases, accredited investors are able to invest in these properties without worrying about tenant costs cutting into their potential returns.
Simply answer a few questions — including how much you would like to invest — to start browsing their full list of available properties.
At the end of the day, everyone’s financial situation is different — from income levels and investment goals to debt obligations and risk tolerance — which means the best move for someone else might not be the best move for you.
Advisor.com is an online platform that matches you with vetted financial advisors suited to your unique needs. They can help tailor a strategy to your particular financial situation, whether you’re looking to grow wealth, diversify beyond stocks or plan for long-term financial security.
Once you’re matched with an advisor, you can book a free consultation with no obligation to hire.
@chamath (1); State of California Department of Justice (2); The New York Times (3); Business Insider (4); Business Wire (5); California Billionaire Tax Act (6); CNBC (7)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
