California’s Billionaire Tax Act would impose a one‑time 5% tax on the total wealth of California residents whose net worth reaches at least $1 billion, using a Jan. 1, 2026 effective date even though voters will not decide on the measure until November. This retroactive structure, combined with California’s strict “closest connection” residency test, makes it very difficult for billionaires to avoid the levy by moving, since proving a genuine change of tax residence usually takes months and requires shifting homes, family life, and assets out of the state.
Some high‑profile figures, like Peter Thiel, have already moved to states such as Florida, while others, including Nvidia CEO Jensen Huang, say they are willing to stay and pay the tax. Tax attorneys quoted in the piece describe the proposal as intentionally designed so that “the ship has sailed” for many billionaires, although they also predict major legal challenges that will focus on whether creating a new wealth tax and applying it retroactively violates constitutional due process.
Reference
Frank, R. (2026, January 8). California’s controversial wealth tax proposal leaves billionaires with little way out. CNBC. https://www.cnbc.com/2026/01/08/california-wealth-tax-proposal-leaves-billionaires-with-little-way-out.html