Did California lose? Larry Page? The co-founder of Google and Alphabet, who left day-to-day operations in 2019, has seen his net worth skyrocket in the years since — from about $50 billion at the time of his departure to about $260 billion today. (Leaving his job clearly didn't hurt his wallet.) Last year, a proposed ballot initiative in California threatened billionaires like Page with a one-time 5 percent wealth tax, prompting some of them to leave the state before the end of the year, when the tax, if passed, would go into effect retroactively. Page appears to have been one of those defectors; The Wall Street Journal reported that he recently spent more than $170 million on two homes in Miami. The article also indicated that its co-founder Sergey Brin might also become a Florida man.
The Google guys, formerly California icons, are just two of the roughly 250 billionaires covered by the plan. It is not certain whether many of them went to Florida, Texas, New Zealand or a space station. But it's clear that many outspoken billionaires and other super-rich people are publicly losing their minds over the proposal, which will appear on the November ballot if it gathers about 875,000 signatures. Hedge fund magnate Bill Ackman calls it “catastrophic.” Elon Musk, the richest man in the world, boasted that he already pays a lot of taxes, so much so that one year he claimed his tax returns had broken the IRS computer.
Yet even the large amounts that some billionaires pay, taken as a percentage of income, are far lower than the tax rates that many teachers, accountants and plumbers pay each year. If Musk, who is currently worth an estimated $716 billion, had to pay a 5 percent wealth tax, he would probably manage to get by on $680 billion in savings – enough to buy Ford, General Motors, Toyota and Mercedes, and still remain the richest person in the world. (At least he's safe from California taxes; he moved to Texas a few years ago.)
California politicians, including Governor Gavin Newsom, generally oppose the initiative. One glaring exception is Rep. Ro Khanna, who told WIRED in a statement that he is on board with “a modest wealth tax on billionaires to address staggering inequality and ensure people have health care.”
Khanna could pay a price for taking on the rich and could therefore face a major challenge backed by oligarch money. A safer position for Bay Area politicians is that of San Jose Mayor Matt Mahan. He recently posted a tweet opposing the bill, saying that if California passed the wealth tax, the country would cut off its nose to show its face. When I speak to Mahan, he emphasizes the risk that California is alone in taxing the net worth of billionaires. “It endangers our innovation economy, which is the real engine of economic growth and opportunity,” he says. (Mahan isn't super rich, but he's bordering on a billionaire: He was once CEO of a company co-founded by former Facebook president Sean Parker.)
Because of the mobility of wealthy people, California is very concerned about the impact of a state wealth tax. Not being a billionaire myself, I find the idea baffling: moving away from your ideal home just to avoid a tax that doesn't affect your living situation seems, to use Mahan's words, like cutting off your nose to spite your face.
Moreover, I don't see why an exodus of billionaires necessarily means the end of Silicon Valley as a heart of technological innovation. If you want become As a billionaire, there's no better place than the Bay Area, with an ecosystem that nurtures innovative companies. That doesn't change. A few years ago, some techies moved to Miami and claimed it would be the new Silicon Valley. That didn't happen.
