California billionaires threaten to leave state over proposed 5% tax on wealthy residents

Some of California’s wealthiest residents are threatening to leave the state over a proposed tax that would impose a one-time five percent fee on assets of those in the state worth more than $1 billion. 

Among those considering the move are tech venture capitalist Peter Thiel and Google co-founder Larry Page. Page, who is a longtime resident of Palo Alto, has reportedly discussed leaving the Golden State by the end of the year, two people briefed on the talks told the New York Times. Three limited liability companies associated with Page filed earlier in December to incorporate in Florida. 

Thiel, three people familiar with the matter said, is considering reducing his ties to the state, and has explored opening an office for his personal investment firm, Thiel Capital, in another state.

Palmer Luckey, cofounder of defense tech startup Anduril, has said that such a tax on billionaires would force "founders like me to sell huge chunks of our companies to pay for fraud, waste, and political favors for the organizations pushing this ballot initiative."

The ballot proposal is backed by the Service Employees International Union–United Healthcare Workers West. The five percent tax would apply to a wide range of assets, including stocks, real estate, artwork, and even intellectual property rights. To qualify for the statewide ballot, the union must collect roughly 875,000 voter signatures. California is home to an estimated 255 billionaires, more than any other US state. 

Lucky continued, "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. And if we can't, the state is going to seize my home and garnish my wages for the rest of my life.  One market correction, nationalization event, or prohibition of divestiture (not at all uncommon during wartime) and I am screwed for life."

Pershing Square CEO Bill Ackman wrote, "California is on a path to self-destruction. Hollywood is already toast and now the most productive entrepreneurs will leave taking their tax revenues and job creation elsewhere."