US tech billionaires are planning to leave California ahead of a vote that could tax their assets to help pay for medical bills. Peter Thiel, known as the "godfather of Silicon Valley venture capital," has considered staying outside California longer and opening an office in another state for his Los Angeles-based personal investment firm Thiel Capital, sources said.
Meanwhile, Google co-founder Larry Page has discussed leaving California before the end of the year, and three LLCs linked to him have filed documents to register in Florida.
Tech investor Chamath Palihapitiya has warned of the risks of a wealth tax in California, saying it would ultimately bankrupt the state.
He posted on X last Monday: "The inevitable result will be an exodus of the state's most talented entrepreneurs who can and will choose to build their companies in less backward states, leaving only the middle class. Therefore, the tax burden will fall on the middle class, because after the 'richest' choose to leave, the middle class is both (a) the only one left and (b) the largest source of revenue for the state to tax."
On Friday, he responded to Sen. Ted Cruz, who urged him to move to Texas, saying he was "seriously considering it."
Backers of the potential wealth tax must still collect enough signatures to qualify for the ballot in November 2026.
The proposal would require California residents with assets in excess of $1 billion to pay a one-time tax equal to 5% of their assets. Page is estimated to be worth $270 billion and Thiel is worth $27.2 billion.
The Healthcare Workers International Union-Western Union, the health care union pushing the measure, estimates a wealth tax could raise $100 billion in revenue and offset cuts in federal funding.
But California Governor Gavin Newsom, a Democrat, has expressed opposition to the proposal.
Many companies have left California for places with lower taxes and fewer procedures. Elon Musk moves his Tesla and SpaceX to Texas.
While leading AI companies are still headquartered in California, new data centers and AI infrastructure are being built outside the state, where land, water and electricity are more readily available.
Democratic Rep. Ro Khanna, who represents parts of Silicon Valley, said the tax helped build the artificial intelligence industry and dismissed the idea that tech entrepreneurs would not start companies in the state because of the 1% tax, adding that innovators were attracted to the region's talent.
Still, he acknowledged a lack of accountability and concerns about state tax fraud and said Sacramento needs to take anti-corruption measures.