Apparently, California billionaires have another reason to consider packing their bags.
California’s Proposition 40 would impose a one-time 5% wealth tax on billionaires—people with a net worth of more than $1 billion who were California residents as of January 1, 2026. (which means it’s already too late to leave California to avoid the tax)
It’s not an annual tax.
It would be a one-time wealth tax, due in 2027. Taxpayers could choose to spread the payments over five years, although doing so would cost them more.
Real estate, pensions, and retirement accounts would generally be excluded.
And 90% of the money raised would be used for public health care services.
Okay.
That changes things a little.
If it were 5% every single year, even I would think, “Yeah, that’s a lot.”
Someone worth $1 billion would be paying $50 million.
Someone worth $10 billion?
That’s $500 million.
If that happened every year, I’d probably be looking at houses in Nevada too.
But one time?
The ordinary person in me can’t help thinking:
Come on. You’re a billionaire. You’ll be fine.
Of course, I’m sure the billionaires themselves see it very differently.
Maybe they’re thinking:
“Why should I hand over 5% of the fortune I built with my own talent and hard work to everyone else?”
And to be fair, 5% of a billion-dollar fortune is not exactly pocket change.
But then the ordinary person in me returns and says:
“Yeah…but you still have $950 million.”
Sorry.
It’s very difficult for me to feel the pain.
But There Is Another Side to the Story
This is where the issue becomes more complicated.
California’s own fiscal analysis acknowledges that some billionaires could respond to the tax by changing their behavior—including leaving California.
And billionaires don’t just have wealth.
They also generate enormous amounts of taxable income.
If enough of them establish residency somewhere else, California could lose some of the income tax revenue they currently pay every year.
So California could collect tens of billions of dollars from the one-time wealth tax, while potentially losing hundreds of millions of dollars in annual income tax revenue in the future.
Suddenly, “Just tax the rich!” becomes a little more complicated.
You can tax people who have enormous amounts of money.
But what happens when those people—and their taxable income—leave?
California Is Expensive. So Where Does All the Money Go?
California is already famous for high taxes and an extremely high cost of living.
And sometimes I wonder:
Where does all that money go?
Roads.
Schools.
Health care.
Homelessness programs.
Public services.
And, I assume, a substantial amount toward public employee pensions and benefits as well.
In the case of this proposed billionaire tax, at least the destination is fairly clear: 90% would be earmarked for public health care services.
Still, there’s a strange disconnect between the enormous amount of money circulating in California and the everyday experience of actually living here.
The roads aren’t exactly perfect.
The homelessness problem certainly hasn’t disappeared.
Rent keeps going up.
Gas is expensive.
Eating out is expensive.
Pretty much everything is expensive.
And somehow, regular people’s salaries don’t magically rise at the same speed.
Meanwhile, I’m Excited About New Products at Trader Joe’s
While billionaires are apparently saying,
“California taxes are too high! I’m leaving!”
I’m living at a slightly lower level than the average commoner.
Most of my paycheck disappears into rent.
My affordable entertainment consists mostly of free YouTube videos and checking out the latest products at Trader Joe’s.
Very glamorous.
And even then, when I see something interesting online and finally make it to Trader Joe’s to buy it…
Sold out.
So there we are.
Billionaires are moving from California to escape taxes.
I’m moving from aisle to aisle at Trader Joe’s trying to find a seasonal snack.
Two very different California experiences.
The Song That Somehow Explains California
Whenever I think about California, there is one song that feels strangely appropriate:
The Eagles’ “Hotel California.”
Of course, the song isn’t literally a description of everyday life in California, and people have interpreted its meaning in many different ways.
But the atmosphere of the song feels remarkably familiar.
Beautiful.
Glamorous.
Seductive.
A little fake.
A little decadent.
Full of wealth, status, cars, luxury and excess.
And underneath all that beauty, something feels slightly wrong.
There’s that famous line:
“This could be Heaven or this could be Hell.”
Honestly, what better description of California is there?
The weather is beautiful.
There’s the ocean.
Palm trees.
Blue skies.
Winters are mild.
It looks like paradise.
Then you look at your rent.
Hell.
I Don’t Really Love California. But Can I Leave?
If someone asked me whether I love California, my answer would actually be…
Not really.
There are plenty of things I don’t like.
Relationships can feel superficial.
There’s a strange artificial quality to parts of the beach culture.
There are status-conscious people everywhere.
Traffic.
High rent.
High prices.
Everything costs money.
There are people I don’t particularly like and places I don’t particularly like.
And yet…
After living here for so long, I’ve somehow become comfortable with California’s emotional dryness.
People are people.
I’m me.
Nobody seems particularly interested in what anyone else is doing.
And nobody is particularly interested in me either.
That might sound cold.
But it’s also strangely relaxing.
People don’t interfere with your life very much.
Nobody seems terribly concerned about how old you are, what you’re doing with your life, or whether you’re dressed appropriately for your age.
You can walk around looking ridiculous and, most of the time, nobody cares.
Once you get used to that distance, I sometimes wonder whether I could still live somewhere with much closer, more involved social relationships.
Can the Billionaires Really Leave Either?
And that makes me wonder about the billionaires too.
They may say:
“Taxes are too high. I’m leaving California.”
But can they really leave?
Maybe they change their official residence to Nevada, Texas, or Florida.
But their companies are here.
Their houses are here.
Their friends are here.
Their networks are here.
Maybe part of their lives remains in California anyway.
And then there are ordinary people like me.
“Rent is too high!”
“Taxes are too high!”
“I don’t even like it here that much!”
And yet…
I’m still here.
Which brings me right back to Hotel California.
Maybe you can check out.
But can you really leave?
From billionaires protecting their fortunes to people like me hunting for the latest Trader Joe’s snack, perhaps we’re all just guests (prisoners) in one enormous Hotel California.
Some of us just have much nicer rooms.