Billionaires are following Elon Musk out of California

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And the only way that we can continue doing this is with your support. So one second of your time to hit the subscribe button right now would help this show tremendously. Thank you so much. Larry Page, who's the co founder of Google, has discussed leaving California by the end of this year. Peter Thiel, the venture capitalist who co founded PayPal and Palentier is exploring moving his investment firm to another state. Both men are responding to the same thing. A proposed ballot measure that would tax California billionaires 5% of their total wealth. It's not 5% of their income. That's 5% of everything that they own. For Paige, whose net worth is estimated at $250 billion, the tax bill could exceed 12 billion. For TEAL, worth around 27.5 billion, the bill would top $1.2 billion. The measure has not even qualified for the ballot yet, and billionaires are already filing paperwork to incorporate in Florida. Now, what happens when a state tries to tax the people who can most easily leave? They have the resources. They can do whatever they want. And the answer involves a health care union, federal budget cuts, a Christmas party themed around the American Revolution, and a debate that has tech founders calling this an organized seizure of private property. The Measure could raise $100 billion from about 200 people. Governor Gavin Newsome has already come out against it. So have some of the most prominent names in Silicon Valley, and we'll get right into that. After this very short break. Been out here all morning. Not a single bite. Guess the fish finally figured it out. Just like hackers do when Cisco Duo's on guard with Duo's end to end fishing resistance, every login, every device, every user stays protected. No hooks, no catches, no bites. Cisco Duo fishing season is over. Learn more@duo.com California is home to more billionaires than any other state in the country. About 200 to 250 of them, depending on how how you count them and the proposed tax targets. All of them. In October of 2025, a HealthC care workers union called SEIU United Healthcare Workers west filed paperwork to place the California Billionaire Tax act on the November 2026 ballot. Now the union says federal health care cuts under the One Big Beautiful Bill act will strip roughly $100 billion from California healthcare over the next five years. Now the wealth tax is their answer to that. They're going to get that money back. The mechanics are very straightforward. Any California resident with a net worth exceeding a billion dollars would pay a one time tax equal to 5% of their total assets include stocks, bonds, business interests, intellectual property, artwork, anything of value except real estate held directly, pensions in retirement accounts up to $10 million. The tax would apply to wealth held as of December 31, 2026. And the catch is residency. If you were a California resident on January 1, 2026, you owe the tax even if you leave before the measure passes. That makes this retroactive the ballot initiative would not be voted on until November of 2026, and by then the residency cutoff would already be about 10 months in the past. Now the retroactive structure is why some billionaires are moving right now, not waiting to see if the measure qualifies or passes. In mid December, three limited liability companies associated with Larry Page filed documents to incorporate in Florida. It's a standard early step for someone establishing residency in a new state. Page has been a longtime resident of Palo Alto. Peter Thiel owns a home in the Hollywood Hills and runs Teal Capital out of la, according to the New York Times. He has explored opening an office at another state, spending more time outside of California. And earlier this month, Peter Thiel hosted a Christmas party at his Hollywood Hills mansion. The theme was All Things Britain, the country American revolutionaries revolted against in 1975. Axer after taxation now, guests reportedly discussed the implications of the proposed ballot measure at that party. Now the union backing the measure says the revenue would split 90% to healthcare programs and 10% to K through 12 education and food assistance. Dave Reagan President of SEIUHW has framed the tax as an emergency response. Without action, he says, millions of people will lose healthcare, an untold number will go without treatment, and there will be tragedy after tragedy after tragedy. And the Union argues that California's billionaires built their wealth using the advantages of California, its universities, its talent pool, its infrastructure, and should help fund services when federal money disappears. Now post posters on X say the measure will eventually bankrupt all of California. And that was Chamath Pala Hapatia. It was a tech investor and former Facebook executive. It's predictable, but also precise. If you get the billionaires out of there, what you know, what happens to their money? It goes with them, right? The most talented entrepreneurs can and will leave the state, and they'll leave for states that do not tax wealth. And when they leave, they take their income taxes with them, they take their homes with them. All the money that they spend in that state goes with them. It goes to another state, Florida, possibly. California's top 1% already pay more than half the state's income tax revenue. And who pays that after they go? Palmer Lucky, the founder of Audrey and one of the most vocal critics, raised a different problem. The tax applies to paper wealth, not actual cash. Lucky sold his first company, Oculus, to Facebook for $2 billion. He paid hundreds of millions in taxes on that sale. He then used the remainder to start Andreil, a defense technology company that now employs 6,000 people. His stake in Anduril is worth billions. On paper, he can't spend that money. He can't sell large chunks without disrupting the company or triggering capital gains taxes. And under the proposed tax, he would owe billions in cash based on the value of shares he cannot easily liquidate. And if he can't pay, the state could seize his home and garnish his wages. Which is crazy. One market correction, one nationalization event, one prohibition of divest divestiture, and I'm screwed for life, he posted. That's his phrasing, not mine. Dylan Field, who's the co founder and CEO of Figma, pointed out that founders and early employees could get caught up in the tax without the ability to use company stock to pay for it. Startup compensation often consists of equity in companies that have not gone public. I've been part of that. When you start a company with somebody or when you are part of the founding team, if you wear founded a company with about five people and you get early equity, right? You get shares in the company before it goes public and you don't get any money for those shares, you actually buy into them sometimes and you have to pay money for those shares instead of just give being given them if that wasn't part of your deal, Right? So sometimes people buy $10,000 worth of shares because they believe so much in this company and they want to make it happen. And you know what? They can't use those shares because the company isn't worth anything yet. Right before the ipo, they can't convert it to cash until an IPO or an acquisition. Now, the proposed tax would treat that equity as taxable wealth anyway. So you can't. I mean, you're going to go bankrupt. And if the company later has a down year, the founder might be forced to lower the company's valuation through a down round just to meet the tax obligation. Okay, so Dave Friedberg, co owner, co founder of ohalogenetics, called the measure an organized government seizure of private property from citizens who have already paid other state taxes that can total 53% in California. He compared it to politics in the Soviet Union, Cuba, Venezuela, France and Norway. Now the political response has been very predictable. Ro Khanna, who's a Democrat, represents part of Silicon Valley, flagged the New York Times story about Paige and Teal potentially leaving. He added a line echoing President Franklin Roosevelt said, I will miss them very much. Khanna said he opposes taxes on unrealized gains and supports workarounds for founders with illiquid assets. But he defended the broader principle. Tax dollars helped build the AI industry. He wrote, and we cannot have a nation with extreme concentration of wealth in a few places. But where 70% of Americans believe the American dream is dead and healthcare, childcare, housing and education are unaffordable for most people. His argument is that innovation will not be stifled by a tax. Wealth political dysfunction and social unrest definitely will. But that's the divide. One side sees the taxes theft. The other sees concentrated wealth as a theft to social stability. Neither side's moving on this. They're staying focused. Governor Gavin Nome has opposed this measure. So has the California Taxpayers association, which warned that the tax would chase high income residents out of the state and faces serious legal challenges. The Legislative Analyst Office, California's nonpartisan fiscal adviser, confirmed the legal uncertainty measure could violate the dormant commerce clause of the United States Constitution because it taxes worldwide assets. It could violate due process protections. Because it is retroactive, it could be classified as a property tax, which California restricts under Article 13 of its constitution. California Taxpayers association estimated that a previous smaller wealth tax proposal would cost 200 to $300 million annually just for administration. Now the current initiative allocates only 15 million for administration, and if courts strike down the measure after it passes, the state would have spent years litigating tax it cannot collect. Now the backdrop is income inequality that has grown stark. Congressional Budget Office data shows that the share of wealth held by families in the top 10% is around 69%. The share held by families in the bottom 50% is 3%. That gap has widened over 33 years. The billionaires threatening to leave California did not create that gap alone, but they represent its most viable edge now. Companies have already been leaving California for states with lower taxes and fewer regulations. Elon Musk moved Tesla and SpaceX to Texas. New data centers and AI infrastructure are being built outside of California, where land, water and electricity are more more available and cheaper. And the wealth tax could accelerate that trend. Gary Tan, CEO of Y Combinator, told the New York Post that the measure would cause a stampede of unicorns out of California. Other states would reap the benefits of entrepreneurs, technology and the jobs that California enjoys now. Now the measure still needs about 875,000 valid signatures to qualify for the November 2026 ballot. Signature gathering is expected to begin in early 2026, and if it qualifies, it requires only a simple majority to pass. Union internal polling suggests strong voter support, though SEIU UHW has not really specific numbers, and the question is whether voters will see this as a fair ask of people who can afford it or as the first step toward a broader wealth tax that reaches further down the income ladder. Robert Reich, former Labor Secretary under Bill Clinton, has endorsed the measure as a wealth tax that will work. Bill Ackman, the hedge fund manager, warned that California is on a path to self destruction. Hollywood is already toast, he wrote, and now the most productive entrepreneurs will leave, taking their tax revenues and job creation elsewhere. The vote's 11 months away. Some billionaires are not waiting to see how it turns out. Hey, thank you so much for listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platforming on right now, I greatly appreciate it. It helps out the show tremendously and you'll never and each episode is about 10 minutes to get you caught up quickly. And please if you support the show even more.com stage zero and please take care of yourselves and each other and I'll see you to.