The Billionaire Tax Failed in California, and Voters Protected Your Retirement

There is some good news from Tuesday’s blue wave election. One of the three “Save Prop 13” Initiatives has officially passed, and voters rejected the billionaire tax.

Proposition 42, the Prohibit New Taxes on Retirement Holdings, Personal Assets, and Savings and Limit Retroactive Taxes Initiative, prohibits certain new state taxes on ownership or control of personal property and certain retroactive taxes, the Howard Jarvis Taxpayers Association explained. It amends the state constitution to prohibit California politicians from imposing any kind of tax on your home equity, savings, checking, 401k, IRA or a brokerage account.

Assemblyman Carl DeMaio said Thursday, “When I first proposed the Savings Tax ban in the state legislature last year with ACA-14, Democrats killed the bill. But with your help and support, we collected signatures and forced it onto the ballot. Now it is the law!”

“Democrat socialists have made creation of a Savings Tax one of their top money-grabbing priorities, but we have shut that down – permanently.”

24/7WallStreet reported on Prop 42:

Opponents of the billionaire tax wrote Prop. 42 as a firewall, and under the rule for conflicting measures, if both had passed, the one with more votes would have won. With Prop. 40 defeated, Prop. 42 would stand on its own as a barrier against the next proposal.

Wealth tax thresholds tend to drift lower, exposing savers.

Federal Reserve data show where the money sits. In the second quarter of 2026, households between the 50th and 90th wealth percentiles held 39.7% of all defined-contribution retirement assets, and the next 9% held 44.1%. The top 0.1% held only 1.3%. Billionaires hold their wealth mostly in company stock and private businesses. Middle-class families hold theirs in workplace plans. Nationally, 401(k) plans held $10.0 trillion and IRAs held $18.9 trillion as of the third quarter of 2025, according to the Investment Company Institute.

Prop. 42’s protection is written in broad terms: wealth, investment accounts and personal property, categories that cover a retiree’s brokerage balance and the investment accounts a family has built over decades.

Prop 40 – Billionaire tax goes down

Sponsored by the SEIU, Prop 40, the One-Time Wealth Tax for State-Funded Health Care Programs Initiative would have imposed a one-time 5% tax on individual wealth exceeding $1 billion, retroactive to January 1, 2026, so billionaires couldn’t avoid responsibility by moving their assets or claiming residency elsewhere. It is a tax on “unrealized gains,” meaning a tax on any valuable property owned by billionaires – car collections, planes, yachts, jewelry, art, designer furniture – anything of value.

As entrepreneur David Sacks explained, “The Billionaire Tax Act in California is not just an unrealized gains tax. It’s a 5% across-the-board confiscation of net worth. It applies even if one has already realized and paid taxes on the entire amount.”

It is double taxation and unconstitutional.

More than $1 Trillion had already left the state in January 2026.

Gary Tan warned, “A simpler explainer on the effects. It won’t just be Page and Thiel. It will stop future Googles and Nvidias from even starting in our state. Why would you be for this? Unrealized taxes on the fastest growing startups make sure the California dream ends for everyone.”

Gavin Newsom originally claimed that he opposed the proposed state-level “billionaire tax” in California. But, he never campaigned against it. In fact, he never did anything except talk about his opposition – a far cry from other ballot initiatives that he has opposed.

And then Newsom proposed a national billionaire tax, so billionaires would still be taxed, regardless of what state they live in.

The Globe reported Jan 12, 2026 what Chamath Palihapitiya posted to X:

Unfortunate update as of today: More calls from friends. The total wealth that has left California is now $1T. We had $2T of billionaire wealth just a few weeks ago. Now, 50% of that wealth has left – taking their income tax revenue, sales tax revenue, real estate tax revenue and all their staffs (and their salaries and income taxes) with them.

Despite the exodus of the billionaires, the left was all-in on the tax. The SEIU’s characterization of the billionaire tax was absurd: “to prevent the state’s healthcare system from collapsing.” Instead of reforming Medi-Cal and and California’s version of Obamacare, Covered CA, the SEIU wanted more money.

Voters saw through the greed scheme.

As 24/7WallStreet notes, “Voters kept one major tax in place. Prop. 41, the other measure backed by opponents, would have invalidated the billionaire tax through stricter rules on new state taxes. It was trailing. Prop. 3 passed, making permanent the high-earner income tax that funds K-12 education.

The pressure to leave shows up in IRS migration data. That data for 2022 to 2023 show California lost a net $11.92 billion in adjusted gross income to other states. Texas was the top destination, drawing 44,417 returns.”

Stanford economists Joshua Rauh and Benjamin Jaros identified these seven publicly reported departures before the Prop 40 cutoff as having removed roughly $500–540 billion – nearly 30% – from the potential tax base:

• Larry Page (Google/Alphabet co-founder) — Moved residency to Miami, Florida (purchased waterfront properties totaling around $173 million); shifted many associated LLCs out of California. Estimated potential savings in the $11+ billion range if the tax had applied.
• Sergey Brin (Google/Alphabet co-founder) — Moved to the Nevada side of Lake Tahoe, registered to vote in Nevada, and shifted numerous LLCs (some to Nevada). He was a major funder of opposition efforts and publicly criticized the proposal. Estimated potential savings around $11 billion.
• Peter Thiel (PayPal, Palantir, etc.) — Formally announced his departure from California in late December 2025, opened a family office in Miami, and had previously shifted voter registration and other ties toward Florida.
• Don Hankey (auto lending) — Relocated from a Malibu estate to Las Vegas/Nevada area.
• Travis Kalanick (Uber co-founder) — Moved to Texas (Austin/Houston area) on or around December 18, 2025; publicly noted the timing was “prior to January.”
• David Sacks (Craft Ventures / investor) — Relocated toward Austin, Texas; his firm opened an office there.
• Steven Spielberg — Moved from California to New York City around the end of 2025. His representatives have said the move was long-planned for family reasons (proximity to children/grandchildren) and not primarily driven by the tax.

Forbes listed additional names including Lynsi Snyder of In-N-Out Burger, and Meg Whitman. Mark Zuckerberg considered moving, and even bought Florida property, but ultimately stayed in California.