The state lost an estimated $536 billion in wealth from its tax base—before the initiative even qualified for the ballot.

“Good riddance.” That was the response from one California commentator when several billionaires announced plans to leave the Golden State late last year to avoid a proposed “billionaire tax.” The ballot measure, which voters could be asked to approve this fall, would impose a one-time 5 percent tax, payable over five years, on all California residents with a net worth exceeding $1 billion and who resided in the state as of January 1, 2026.

When reports emerged in December 2025 that venture capitalist Peter Thiel and Google co-founder Larry Page were preparing to relocate to avoid the tax, San Francisco Bay Area Representative Ro Khanna joked that he would “miss them very much.” Others insisted that even if a few billionaires departed, the tax would still deliver a windfall for the state.

They may want to reconsider. A recent study led by Stanford economists for the Hoover Institution finds that the measure will collect significantly less revenue than its supporters promised. Worse, the permanent loss of future income-tax payments from departing billionaires could end up costing California far more than the wealth tax ever collects.

That poses a problem for the proposal’s backers, including the Service Employees International Union–United Healthcare Workers West, which is sponsoring the initiative. In support of the tax, they point to an expert report by pro-wealth tax economists, who estimated it would raise $100 billion.

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