California may soon witnesses an exodus of some of its most prominent tech billionaires. As reported by New York Times, venture capitalist Pete Theil and Google co-founder Larry Page are thinking of cutting down and reducing their ties to the state before the end of the year.

The reason behind this decision is a proposed ballot measure that would impose 5% tax on residents worth more than $1 billion. The initiative is backed by the health care union SEIU-United Healthcare Workers West, could raise up to $100 billion from about 200 billionaires is approved. If passed, it would retroactively apply to anyone who lived in California as of January 1, 2026. Larry Page, whose net worth is estimated at $258 billion, the tax could mean a one-time bill of more than $12 billion.

On the other hand, for Peter Thiel, worth around $27.5 billion, the liability could exceed $1.2 billion.

Billionaires thinking of leaving California

58 year-old Pete Theil who owns a home on the Hollywood Hills has explored the idea of opening an office for Thiel Capital in another state and spending more time outside California. On the other hand, 52-year old Page a longtime resident of Palo Alto is reportedly discussing to leave the region by end of this year. In December, three LLCs linked to him filed incorporation documents in Florida, signaling preparations for relocation.

The political push

Governor Gavin Newsom has spoken out against the measure, calling state-level wealth taxes “not pragmatic.” He is raising funds for a committee to oppose the proposal, which has already received donations from Silicon Valley investors such as Ron Conway. Tech investor Chamath Palihapitiya also warned of an exodus, writing: “The inevitable outcome will be an exodus of the state’s most talented entrepreneurs who can and will choose to build their companies in less regressive states.

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Bill Ackman warns California on the path of self-destruction

Bill Ackman the hedge fund billionaire also raised alarm over California’s economic future as the wealthiest residents of the state are planning to leave due to the proposed tax targeting billionaires. Ackman echoed similar concerns in a post on X, “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.And then the Democrats highlight @CAgovernor Newsom as a great leader.

Crazy.”Ackman has criticised the political leadership of California and believes that the proposed aggressive tax policies are pushing the entrepreneurs out. These people are the ones who drive both the job market and economic growth.The debate comes amid growing concerns about income inequality in the United States. Data from the Congressional Budget Office shows the top 10% of families hold 69% of wealth, while the bottom 50% hold just 3%.California’s Legislative Analyst’s Office estimates the tax could generate tens of billions in one-time payments. However, they warn that long-term income tax revenues could decline by hundreds of millions annually if billionaires leave.