Gov. Gavin Newsom has California on a path of total economic collapse – and legendary investor Bill Ackman says if Newsom moves forward with the latest Democrat-backed tax on billionaires, it will leave Silicon Valley a ghost town.
“California is on a path to self-destruction,” Ackman, chief of Pershing Square Capital Management, wrote on X.
“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.”
Recently, tech billionaires, including Google co-founder Larry Page and venture capitalist Peter Thiel, have announced they’re prepared to flee their longtime blue state home over the proposed ballot measure that would impose a one-time 5% tax on California residents worth more than $1 billion.
The proposed “2026 Billionaire Tax Act” would apply retroactively to anyone living in California as of January 1, 2026. For billionaires with $20 billion or more in assets, the tax would include an additional one-time payment of $1 billion, to be paid over five years.
According to the Bloomberg Billionaires Index, Page is worth $270 billion and could face a tax bill exceeding $12 billion.
Thiel, whose net worth is estimated at $27.5 billion, could owe more than $1.2 billion. The union estimates the measure could grab up to $100 billion from approximately 200 billionaires in the state.
Sources told The New York Times that Thiel has explored opening an office for his Los Angeles-based personal investment firm, Thiel Capital, in another state and spending more time outside California. Page, a longtime Palo Alto resident, has discussed leaving the state entirely by year’s end. In mid-December, three limited liability companies associated with Page filed incorporation documents in Florida.
“I am opposed to wealth taxes because they effectively represent an expropriation of private property and because they can have unintended and negative consequences,” Ackman wrote.
He said he favors a “fairer tax system.”
Ackman said that under the current tax code, an individual who has amassed a billion dollars or more in wealth could pay no personal income tax by living off loans secured by stock in their company.
“One shouldn’t be able to live and spend like a billionaire and pay no tax,” Ackman wrote.
But California’s budget problems are not about a lack of tax revenue, Ackman said. Rather, it is about “how the money is being spent” by Democratic lawmakers.
Tech leaders across Silicon Valley have unleashed a flood of criticism against the proposed wealth tax, warning it will devastate the state’s innovation economy.
Palmer Luckey, cofounder of defense tech startup Anduril, warned the tax would force founders to sell significant portions of their companies.
“You are fighting to force founders like me to sell huge chunks of our companies to pay for fraud, waste, and political favors for the organizations pushing this ballot initiative,” Luckey wrote.
Luckey said if he and other business owners cannot come up with billions of dollars in cash to pay the tax, the state could seize their homes and garnish their wages.
Tech investor Chamath Palihapitiya warned the wealth tax could crush startup founders and kill entrepreneurship in California.
“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,” Palihapitiya posted on X.
Dave Friedberg, CEO of Ohalo Genetics, described the proposal as an “organised government seizure of private property.” The tax “flirts with socialism” and is “a slippery slope that has never gone anywhere good.”
High-profile attorney Alex Spiro sent a letter to California Governor Gavin Newsom warning that the tax would trigger a flood of billionaires to flee to Republican-controlled states.
“It will trigger an exodus of capital and innovation from California,” Spiro wrote. “Our clients have made clear they will permanently relocate if subjected to this tax.”
If the measure passes as a ballot measure, Newsom would have to sign it. The tax’s backers must gather enough signatures before it can get on the ballot in November 2026.
Many companies have already been leaving California for places with lower taxes and less regulation.
Elon Musk moved Tesla and SpaceX to Texas. While some AI companies are still based in California, new data centers and AI infrastructure are being built outside the state where land, water, and electricity are more available.
Expect that brain drain to continue… especially if Newsom reaches national office.