California Gov. Gavin Newsom

Alex Spiro, a high-profile attorney who has represented tech leaders like Elon Musk and WeWork founder Adam Neumann, has issued an ultimatum to California governor Gavin Newsom: If the proposed “Billionaire Tax Act” is passed, the state’s wealthiest residents will move out.

He sent the ‘warning’ in a letter to the governor, saying that his clients have made it clear that they will leave California and won’t come back, describing the move as a certain “exodus of capital and innovation.”The issue centres around a proposed Billionaire Tax Act that mandates a one-time 5% tax on the total assets of residents worth more than $1 billion. If it gathers enough signatures, it will appear on the November 2026 ballot.Spiro’s letter comes days after Newsom publicly stated he is against the wealth tax and would “fight” it. Meanwhile, Palmer Luckey, the Oculus founder took to X (formerly Twitter) over the weekend to blast the measure. Furthermore, venture capitalist Peter Thiel and Google co-founder Larry Page have reportedly looked into moving out of the state.

Read Alex Spiro’s full getter to California Governor Gavin Newsom

Re: Constitutional Concerns Regarding Proposed Billionaire Tax ActDear Governor Newsom:I represent California residents who would be subject to the proposed Billionaire Tax Act if it qualifies for the November 2026 ballot. I write to urge you to work to prevent this initiative from moving forward. The Act has serious legal problems and would cause significant economic damage to California and the broader economy.First, and most importantly, the Act would be unconstitutional. Although the Act purports to be a tax, it is in reality an uncompensated confiscation of property. The Act imposes a 5% levy on total accumulated wealth, including illiquid assets that generate no income. That is in substance a taking without just compensation. As the Supreme Court explained in Armstrong v. United States, the government cannot force "some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole." 364 U.S. 40, 49 (1960). The Act concentrates an extraordinary burden on a small group to solve a general revenue problem— exactly what the Constitution prohibits.Second, for the people who relocate from California in 2026 before the November election, the Act would tax them after they have become citizens of other States and without any ability to vote on the measure. The Supreme Court has held that retroactive taxation cannot be "harsh and oppressive." United States v. Carlton, 512 U.S. 26, 30 (1994). A 5% levy on total net worth imposed on former residents who departed before the law was even enacted clearly meets that definition.Third, the Act's unprecedented novelty makes it especially vulnerable to a legal challenge. California has never imposed a wealth tax, much less one that reaches former residents and that is targeted at a small group of citizens. The Supreme Court closely scrutinizes unprecedented exercises of government power precisely because they lack historical precedent. See Biden v. Nebraska, 600 U.S. 477, 505 (2023). In fact, it has not hesitated to invalidate the retroactive application of new taxes, even for far less extreme measures. See Blodgett v. Holden, 275 U.S. 142 (1927). There can be no doubt that the current Supreme Court would carefully evaluate a law so out of step with the American legal tradition.From an economic perspective, the Act creates two serious problems. First, it will trigger an exodus of capital and innovation from California. Our clients have made clear they will permanently relocate if subjected to this tax. They are not alone. See California's wealth-tax test: Have voters finally found a policy that the state's inherent economic strengths can't overcome?, Wash. Post (Nov. 17, 2025) (opinion) (describing the tax as "almost tailor-made to drive most Silicon Valley tech companies to Austin, Texas"). In other words, by passing this proposal California would exchange a one-time windfall for the permanent loss of billions in annual income taxes, capital gains taxes, property taxes, and economic activity. The state's most economically productive residents would take their businesses, jobs, and charitable giving with them. Second, the Act will force destructive asset sales. Our clients hold equity stakes in operating businesses, venture capital funds, and real estate. Paying a 5% wealth tax would require massive forced liquidations, depressing asset values and triggering market instability that would harm ordinary investors whose retirement accounts hold these same investments.Our clients are prepared to mount a vigorous constitutional challenge if this measure advances. Litigation would be protracted and expensive, and it would generate sustained negative attention to California's business climate. The prudent course is to prevent this constitutionally defective measure from reaching the ballot. We respectfully ask that you discourage signature gathering, oppose qualification, and if necessary, campaign against passage.Our clients prefer to remain in California and continue contributing to the state's economy and civic life. But they will not remain if subjected to an unconstitutional confiscation of their wealth. We hope this can be resolved through political channels rather than through years of contentious litigation.Respectfully,Alex Spiro