Silicon Valley’s richest residents are once again floating a familiar threat: leave California or pay a steep new price to stay.
This time, the trigger is a proposed ballot initiative that would slap a one-time 5% tax on the assets of the state’s wealthiest residents, a move tech founders say could permanently alter where innovation, investment, and jobs take root.
The proposal is still under review for the November statewide ballot, but the backlash has already begun.
A One-Time Tax With Long-Term Consequences
Backed by the Service Employees International Union–United Healthcare Workers West, the measure would apply to California residents with assets exceeding $1 billion. Supporters argue the tax could help offset looming federal healthcare funding cuts.
Critics, however, see something far more disruptive.
Even before voters weigh in, prominent Silicon Valley figures warn the policy could accelerate an exodus of founders and capital from the state.
Palmer Luckey Sounds the Alarm
Among the loudest voices is Palmer Luckey, cofounder of defense technology firm Anduril. He argues the proposal would force entrepreneurs to liquidate their own companies just to cover the tax bill.
He said the tax would force “founders like me to sell huge chunks of our companies” to pay for what he described as “fraud, waste and political favors for the organizations pushing this ballot initiative.”
Luckey went further, detailing the personal cost of the policy.
“I made my money from my first company, paid hundreds of millions of dollars in taxes on it, used the remainder to start a second company that employs six thousand people and now me and my cofounders have to somehow come up with billions of dollars in cash,” Luckey wrote on X.
The warning is clear. For some founders, success itself could become a liability.
Other Tech Titans Weigh Their Options
Luckey is not alone. According to a New York Times report, billionaire investor Peter Thiel and Google co-founder Larry Page are also weighing whether to sever ties with California if the measure advances.
For ultra-wealthy residents, the numbers are staggering. Thiel, whose net worth is estimated at $27.5 billion, could owe more than $1.2 billion under the proposal if it becomes law.
And that bill would not arrive slowly.
Retroactive Rules Raise New Fears
If approved by voters, the tax would apply retroactively to anyone who lived in California as of Jan. 1, 2026.
In practical terms, a resident holding $20 billion in assets on that date would face a $1 billion tax bill, payable over five years.
That retroactive element has only intensified concerns, particularly among investors who say the policy undermines long-term planning and financial stability.
Bill Ackman Warns of Economic Fallout
Billionaire investor Bill Ackman joined the chorus of critics, painting a grim picture of California’s future if the measure passes.
Calling the state “on a path to self-destruction,” Ackman warned that the damage would extend far beyond Silicon Valley.
“Hollywood is already toast and now the most productive entrepreneurs will leave, taking their tax revenues and job creation elsewhere,” the Pershing Square chief wrote on X.
To critics, the message is blunt. Capital is mobile, and California may be pushing it away.
Governor Pushes Back, Urges Calm
California Gov. Gavin Newsom has publicly opposed the proposed billionaire tax, though he has also urged residents not to overreact.
“It’s not something to be panicked about, but it’s part of the broader concern and narrative that’s developed in this country of the haves and have-nots, not just income inequality, but wealth inequality,” Newsom told an audience at The New York Times DealBook conference.
Still, with the measure inching closer to the ballot, anxiety is spreading across boardrooms and founder circles alike.
The question now is simple but consequential. Will California’s latest tax experiment strengthen its social safety net, or accelerate the departure of the very people who helped build its economy?
