By Paulina Phan, Senior Editorial Contributor
On November 3, California voters will decide whether to impose a one-time 5 percent tax on residents whose net worth exceeds $1 billion. Supporters of Proposition 40, the 2026 Billionaire Tax Act, project the levy would raise about $100 billion, most of it directed to health care. A working paper released this month by two Stanford affiliated economists, published through the National Bureau of Economic Research, reaches a sharply different conclusion: the tax would collect roughly $30 billion, and once the income tax revenue lost to departing billionaires is counted, the state could end up worse off on net.
Between those two estimates sits the central question of the campaign: how much of California’s billionaire wealth would remain within reach of the tax, and for how long.
What Proposition 40 Would Do
The measure, filed by the Service Employees International Union, United Healthcare Workers West, qualified for the ballot in late June 2026. It would apply to individuals and certain trusts with net worth of $1 billion or more. The full 5 percent rate applies to wealth above $1.1 billion, with a reduced rate on the band between $1 billion and $1.1 billion, according to legal analyses of the initiative text. Real estate, pensions and most retirement accounts are generally excluded.
Two dates structure the tax. Residency is determined as of January 1, 2026, while net worth is measured on December 31, 2026. A person who was a California resident on the first date could owe the tax even after relocating, with wealth valued at year end. If voters approve the measure, the tax would come due in 2027. Taxpayers could spread payments over five years at an added charge, and the initiative includes a deferral mechanism for taxpayers whose wealth is concentrated in illiquid holdings such as private company stock, according to an expert report prepared for supporters by tax scholars Brian Galle, David Gamage, Emmanuel Saez and Darien Shanske. Understatements would carry penalties of 20 to 40 percent.
Proponents estimate the tax would apply to roughly 200 to 250 of the state’s wealthiest residents. Campaign materials direct 90 percent of revenue to health care programs, principally Medi-Cal, and 10 percent to K-14 education and food assistance. Supporters frame the measure as a response to an anticipated shortfall of about $30 billion a year in state health care funding following federal cuts.
The Departures Researchers Counted
The Stanford study, by Benjamin Jaros and Joshua Rauh, built a person by person estimate of the tax base using Forbes billionaire rankings, real estate records and public relocation announcements. The authors identified seven billionaires reported to have left California before the January 1, 2026 residency snapshot: Google cofounders Larry Page and Sergey Brin, investor Peter Thiel, director Steven Spielberg, Uber cofounder Travis Kalanick, investor David Sacks and auto finance executive Don Hankey. Together, the seven accounted for roughly $540 billion in wealth, nearly 30 percent of the base the researchers considered potentially taxable.
Applying behavioral responses and a discount for the risk that courts invalidate the tax, Jaros and Rauh estimate collections of $28 billion to $36 billion. Their larger concern is the years after the one-time levy. In 100,000 model simulations, lost income tax payments from departures outweighed the one-time revenue in 85 percent of scenarios, producing an average net fiscal loss of $38.9 billion in present value terms. An earlier version of the analysis, published by the Hoover Institution, estimated about $40 billion in revenue and a $25 billion net loss.
The researchers add an important caveat: relocating does not by itself settle a person’s California tax residency, which state law determines through a range of factual tests and which the Franchise Tax Board could contest through audits.
The Property Trail
Property purchases provide the most concrete public record of the departures, and they fall into two waves: purchases made years before the tax was proposed, and purchases made in the weeks before the January 1, 2026 residency date.
The largest belong to the second wave. The Wall Street Journal reported that Larry Page bought a waterfront estate in Coconut Grove, Miami, for $101.5 million in December 2025 and a nearby property for $71.9 million in a sale that closed on January 5, 2026. The South Florida Business Journal reported a third Page purchase in the neighborhood, for $14.97 million, later in January. Page’s representatives told Forbes that he has changed his residency from California to Florida, and Fortune estimated that remaining a resident could have exposed him to a tax bill approaching $15 billion.
Business Insider reported in March 2026 that a waterfront home of nearly 10,000 square feet on Allison Island, near Miami Beach, sold for $51 million to a Nevada limited liability company that the outlet linked to Sergey Brin through addresses and a lawyer associated with his earlier deals; Brin’s name does not appear on the deed. Forbes, citing state records and his representatives, has reported that Brin now lists Nevada as his state of residence and has acquired property in Nevada as well as Florida.
Mark Zuckerberg and Priscilla Chan bought a newly built waterfront mansion on Indian Creek island for $170 million in March 2026, a Miami-Dade County record, the Wall Street Journal reported. The purchase did not change Zuckerberg’s residency. The Journal reported in October, citing a Meta regulatory filing, that he had considered establishing residency outside California because of the proposed tax, and that Meta’s board instead created a new class of shares he could sell to cover a potential liability. Under the arrangement, he agreed to keep his primary residence in California for eight years.
The earlier wave began in 2020. Peter Thiel bought an $18 million waterfront compound on Miami’s Venetian Islands that year, according to Mansion Global and Business Insider, and Forbes has since counted him among the billionaires who moved their homes out of California. Elon Musk announced his move to Texas in December 2020 and sold his California homes over the following year. The New York Times reported in October 2024 that buyers linked to Musk had acquired Austin properties valued together at about $35 million, including a 14,400 square foot house and an adjacent six bedroom home. Musk denied the report; the Wall Street Journal later reported that his longtime money manager had been involved in acquiring Austin property. Larry Ellison left California in 2020 for Lanai, Hawaii, where he owns most of the island, then bought in Florida: an $80 million North Palm Beach estate in 2021 and a 16 acre oceanfront property in Manalapan for $173 million in 2022. Forbes reported this year that he made the Manalapan property his primary residence and estimated that the move saved him about $1 billion in state taxes on Oracle stock sales and dividends.
Texas and Nevada account for the other recent moves. Travis Kalanick said in a March interview reported by MarketWatch that he moved to Texas on December 18, 2025, a date he noted was “prior to January.” He announced no new purchase; he said he had owned a home on Lake Austin for about five years and was making it his primary residence. David Sacks relocated to Austin in December 2025, as his firm Craft Ventures opened an office there, according to the San Francisco Chronicle and Business Insider; no home purchase price has been reported. Don Hankey told Forbes in January that the proposed tax prompted his move, calling it “ridiculous,” after he paid $21 million for a penthouse at the Summit Club outside Las Vegas, a record price for a Las Vegas area condominium, according to Forbes and the Las Vegas Review-Journal.
Not every departure points to a low tax state. Bloomberg Tax reported that Steven Spielberg was among those who left before the cutoff, and other reporting placed his new residence in New York City; no Florida purchase by Spielberg has been reported. Others have announced intentions without a reported purchase. DoorDash cofounder Andy Fang wrote in January that the proposal made it “irresponsible for me not to plan leaving the state,” and the Stanford researchers’ extended estimates list Netflix cofounder Reed Hastings and WhatsApp cofounder Jan Koum as reported to be considering Florida moves, a status the authors label unconfirmed. Tax advisers note that a purchase by itself does not establish a change of residency, which California determines from the overall pattern of a person’s ties to the state.
Supporters Dispute the Migration Math
The expert report backing the measure makes the mirror image argument on residency. Because liability is fixed by status on January 1, 2026, its authors write, leaving the state during 2026 does not avoid the tax, and the one-time design was chosen specifically so the levy does not create an ongoing reason to leave. The report further argues that the broader academic literature finds the very wealthy rarely relocate solely because of taxes, and that California’s concentration of technology talent and capital continues to anchor its richest residents.
Administration is a second point of contention. The initiative allocates up to $15 million a year for enforcement. The Franchise Tax Board previously estimated that a different, annual wealth tax proposed in 2022 would have required $200 million to $300 million a year to administer, excluding startup costs, a comparison critics cite when questioning whether the measure’s revenue projections account fully for implementation.
The politics cut across the state’s usual alignments. Governor Gavin Newsom has publicly opposed the measure, while the California Democratic Party has endorsed it, and some labor unions have raised concerns that it competes with other education funding measures. Opposition fundraising has been substantial: Brin has contributed more than $100 million to efforts against the tax, and former Google chief executive Eric Schmidt and cryptocurrency executive Chris Larsen have each made eight figure contributions, according to campaign finance reporting. Two companion measures, Propositions 41 and 42, were placed on the same ballot to restrict future wealth taxes; if Proposition 42 passes with more votes than Proposition 40, it would override the billionaire tax.
Public opinion appears close. A Public Policy Institute of California survey last month put support at 52 percent. A Citrin Center and Politico poll released in mid October found 46 percent of likely voters in favor and 43 percent opposed.
FAQ
Who would pay the tax? Individuals and certain trusts who were California residents on January 1, 2026 and whose net worth reaches at least $1 billion on December 31, 2026. Supporters estimate about 200 to 250 taxpayers would be affected. Real estate, pensions and most retirement accounts are generally excluded.
Can a billionaire avoid the tax by moving out of California now? Supporters and their legal experts say no, for this one-time levy, because liability is keyed to residency on January 1, 2026. The Stanford researchers note, however, that residency under California law is fact specific, and individual determinations are likely to be audited and litigated.
What happens if the measure passes? The tax would be due in 2027, with an option to pay over five years at an added charge and deferral available for illiquid assets. Both supporters and critics expect constitutional challenges, which could delay or reduce collections.
Sources and Methodology
This article is based on the text and legal analyses of Initiative 25-0024 (Proposition 40), campaign finance and polling reports from the Public Policy Institute of California and the Citrin Center and Politico survey, the expert report by Galle, Gamage, Saez and Shanske, and the October 2026 National Bureau of Economic Research working paper by Jaros and Rauh. The NBER paper is a working paper and has not completed peer review; its revenue and migration figures are modeled estimates, not observed collections. The identities of relocated billionaires are as classified by those researchers from Forbes data, property records and public reports, and individual residency status has not been adjudicated. The property section is based on reporting by The Wall Street Journal (Page purchases; Zuckerberg purchase and Meta board filing), Forbes (residency changes for Page and Brin; the Hankey interview; Ellison tax estimate), Business Insider (the Brin and Thiel purchases), Mansion Global, Fortune, the South Florida Business Journal, The New York Times (Musk properties in Austin), MarketWatch, the San Francisco Chronicle, Bloomberg Tax and the Las Vegas Review-Journal. Property purchases made through limited liability companies are attributed to individuals based on the reporting cited, and purchase prices are as reported by those outlets.