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As California lawmakers debate a new tax aimed squarely at the ultra-wealthy, some of the state’s most prominent billionaires are looking elsewhere, and the political calendar could determine whether a wealth levy becomes law.
California’s November midterm elections will decide control of key legislative committees and shape the political appetite for major tax changes. Pro-tax lawmakers argue that increased revenue is needed to fund services, but opponents view the 2026 ballot outcomes as a referendum on tax competitiveness.
Recent reporting from the Los Angeles Times found that high-profile figures, like Mark Zuckerberg, have explored property in other states (1) — including the recent purchase of a $170M property in Miami (2). The news comes as discussion around a state-level wealth tax gains traction.
And Zuckerberg isn’t alone in his exit.
Filmmaker Steven Spielberg has already shifted his primary residence outside of California. Other wealthy residents are said to be reconsidering their long-term ties to the Golden State.
At the center of the debate is a proposal targeting roughly 200 California billionaires. The measures would impose a one-time 5% “wealth levy,” paid as 1% annually over five years, on worldwide net worth above a certain threshold (3). The levy excludes some real estate holdings, according to a proposal authored by economists at the University of California, Berkeley.
Critically, the draft language includes a residency requirement tied to Jan 1, 2026. Only taxpayers who establish (or maintain) California residency by that date would be subject to the levy.
Supporters, including labor unions and progressive lawmakers, argue that the tax could generate billions of dollars to fund healthcare, education and other public services (4). They often frame the tax as a corrective measure to wealth inequality.
Opponents, including tech leaders and Gov. Gavin Newsom, warn that such a policy risks accelerating an exodus of high earners and capital, weakening the state’s tax base and broader economy.
Critics argue that California already has the highest top marginal income tax rate in the country at 13.3% (5).
The debate raises a broader question: Is this simply political theater, or part of a larger shift in where America’s wealth wants to live?
Governments levy an annual wealth tax on total net worth (including stocks, business ownership, real estate and other assets), regardless of whether someone sells those assets.
California’s proposal would operate more like a temporary, structured wealth levy. The concept mirrors wealth taxes previously implemented in parts of Europe (6).
There are some lessons to be learned here from overseas. Countries like France had to roll back their wealth taxes after running into valuation problems and fears of “capital flight.” Often, these systems were too complex and costly to manage.
Plus, enforcement can become difficult when high-net-worth individuals maintain multiple residences across multiple jurisdictions.
While billionaires debate relocation strategies, most Americans are simply trying to navigate tax season efficiently.
Working with a financial professional can help ensure you’re optimizing your tax strategy and planning — especially as state policies evolve. Platforms like Advisor connect users with licensed financial professionals in their area who can provide personalized guidance, including strategies that may help lower your tax burden.
Beyond tax planning, an advisor can also help you assess how many years you have left before retirement and determine your comfort level with market fluctuations — two key factors in building the right asset mix for your portfolio.
Regardless, it’s no secret that ultra-wealthy households are uniquely mobile. Many already own homes across state and country borders.
Billionaires aren’t constrained by the same things as middle-income households are, namely jobs, schools or community roots. Thus, they face fewer practical barriers to simply leaving whenever they choose.
Whether that mobility translates into mass departures is another matter, but the possibility has had its day in policy talks.
Even before the wealth tax debate hit its zenith, California had been experiencing net domestic outmigration.
According to the California Department of Finance, the state recorded a net loss of roughly 216,000 domestic migrants in 2024-25 (7). Research from Stanford corroborated this, finding that California lost 407,000 residents in 2021-22 and has continued to lose people through outbound migration (8).
In short, this isn’t a billionaire problem. At least, not solely a billionaire problem.
IRS Statistics of Income migration data, which tracks where taxpayers move year over year, shows that states such as Florida and Texas have consistently ranked among the top inbound destinations for tax filers (9). Meanwhile, California has seen more income leave than move in.
Florida and Texas share a key characteristic: no state income tax on wages.
California’s top marginal income tax rate stands at 13.3%, the highest in the nation, according to the Tax Foundation (10). By contrast, Texas, Florida and Nevada impose no state income tax on wages. Instead, they rely on sales taxes, property taxes or tourism revenue to fund government operations.
To be clear, taxes are only one factor influencing migration. Housing costs, quality of life, job opportunities and climate all play roles in migration trends.
But the Tax Foundation’s research shows a correlation between tax competitiveness and net migration flows: States with lower individual income taxes tend to gain residents and tax filers.
In contrast, higher-tax states tend to experience net losses.
This dynamic sets the stage for a broader conversation about tax competition.
The billionaire moves making headlines are certainly high-profile, if not isolated.
Elon Musk relocated to Texas in 2020, citing California’s regulatory and tax environment. Oracle and Hewlett-Packard Enterprise also shifted their headquarters to Texas. And Jeff Bezos swapped his primary residency to Florida in 2023.
Each case has its own individual factors to consider, but collectively highlight a pattern: The ultra-wealthy are increasingly choosing states with lower tax burdens.
For investors, that migration isn’t just an academic discussion. Capital migration can significantly affect housing demand, business formation and local investment opportunities.
Fortunately, you don’t have to relocate to Florida or Texas to benefit from any potential growth in those areas. Broad-market ETFs and regional funds allow everyday investors to gain exposure to areas attracting new residents and capital.
One of the easiest ways to start building that exposure is through automated investing tools like Acorns, a popular app that automatically invests your spare change.
By linking your debit or credit cards, Acorns rounds up everyday purchases to the nearest dollar and automatically invests the spare change into a diversified portfolio. If you want to supercharge your investments, you can also set up monthly contributions in addition to your daily round-ups.
With Acorns, you can invest in a dividend ETF with as little as $5, which is perfect if you’re just getting started out. Even better, if you sign up with a recurring monthly deposit, you can get a $20 bonus to help you begin your investment journey.
But even if you’re not a billionaire, migration trends can still shape your investment strategy.
While few Americans are weighing a move to avoid a wealth tax, millions feel the economic effects of interstate migration through their investment portfolios.
States with growing populations often see increased demand for housing, infrastructure and consumer services. That can benefit local real estate markets and businesses serving growing metro areas.
And investors can gain exposure to these trends in several ways:
Broad market index funds
Real estate investment trusts (REITs)
Regional ETFs focused on Sun Belt growth markets
Direct real estate investments in high-growth areas
That’s where geographic arbitrage enters the conversation. Rather than physically relocating, investors can allocate capital to markets that attract residents and drive income growth.
One way to tap into this market is by investing in shares of vacation homes or rental properties through Arrived.
Backed by world-class investors, including Jeff Bezos, Arrived allows you to invest in shares of vacation and rental properties, earning a passive income stream without the extra work that comes with being a landlord of your own rental property.
That said, you don’t have to move to Austin or Tampa to benefit from their housing markets.
When people move, they need places to live. Increased population growth can tighten rental markets and put upward pressure on property values, though this varies city by city.
For investors, that’s made Sun Belt real estate particularly attractive in recent years. Platforms offering fractional ownership and rental exposure have emerged to give everyday investors access to those markets without directly managing property.
That’s where mogul comes in. This real estate investment platform offers fractional ownership in blue-chip rental properties, which gives investors monthly rental income, real-time appreciation, and tax benefits — without the need for a hefty down payment or 3 a.m. tenant calls.
Founded by former Goldman Sachs real estate investors, the mogul team handpicks the top 1% of single-family rental homes nationwide for you. Simply put, you can invest in institutional-quality offerings at a fraction of the usual cost.
Each property undergoes a vetting process that requires a minimum 12% return, even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10 to 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property.
Real assets secure every investment and are not dependent on the platform’s viability. Each property is held in a standalone Propco LLC, so investors own the property — not the platform. Blockchain-based fractionalization adds a layer of safety, ensuring a permanent, verifiable record of each stake.
Getting started is quick and easy. You can sign up for an account and then browse available properties. Once you verify your information with their team, you can invest like a mogul in just a few clicks.
The surge in investor interest around Sun Belt real estate reflects a broader shift in where Americans are choosing to live.
That shift isn’t happening in a vacuum.
The pattern of migration away from high-tax states toward lower-tax states correlates with tax competitiveness, according to the Tax Foundation’s research.
However, that doesn’t mean every tax increase triggers an exodus. And it doesn’t mean wealth taxes are doomed to fail. But it does suggest states operate in a competitive landscape, particularly when it comes to high-income households.
If wealth can move at the speed of a private jet, policymakers face a balancing act: raise revenue without pushing away the taxpayers who fund a disproportionate share of public services.
For California, the wealth tax debate is about more than political symbolism. It’s a test of whether progressive policy can coexist with capital mobility in a highly interconnected economy.
For investors watching from the sidelines, the lesson may be way simpler. Pay attention to where people and money are moving. When capital shifts, markets will follow.
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LA Times (1); People (2); Berkeley (3); SF Gate (4); Tax Foundation (5); OECD (6); Department of Finance (California) (7); Stanford (8); IRS (9); Tax Foundation (10)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
