“When the Rich Leave, So Do Their Taxes”: California Voters Reject Billionaire Tax as Europe Faces Wealthy Exodus and Shrinking Tax Revenues

California billionaire tax blocked as opposition spreads through Silicon Valley and political circles
Growing departures of wealthy residents to other states raise concerns over long-term erosion of the tax base
Wealth tax debates intensify in Germany and France, while Italy and Norway also grapple with tax reform

Voters in the U.S. state of California have rejected a referendum to introduce a so-called “billionaire tax.” The result followed an opposition campaign bankrolled by Silicon Valley business leaders, with even some Democratic politicians pushing back over concerns about wealthy residents leaving and the tax base weakening. Debates over such tax increases on the wealthy are rapidly spreading beyond the United States to European countries, including Germany, France, Italy and Norway, that are considering or already implementing wealth taxes.

California Billionaire Tax Blocked

On the 9th (all dates hereafter are local time), the Associated Press reported that Proposition 40 had been rejected in California’s referendum held on the 3rd. It said the outcome was unlikely to change even after accounting for mail-in ballots yet to be counted. With 83.4% of the vote counted at the time, 52.7% opposed the measure and 47.2% supported it. The proposal rejected by voters would have imposed a one-time tax of 5% on the wealth of California residents with net assets exceeding USD 1 billion. Rather than taxing wages or income, it would have directly taxed holdings such as stocks, bonds and equity stakes in businesses, with an estimated 250 people subject to the levy.

Discussions of a billionaire tax gained momentum last year after the U.S. Congress cut federal healthcare funding. At the time, a healthcare workers’ union argued that USD 100 billion should be collected in taxes from the ultrawealthy to fund healthcare assistance for low-income residents and other purposes, and the California Democratic Party formally endorsed the proposition. Supporters argued that billionaires accumulate enormous wealth through stock investments and rising company valuations yet pay no income tax on those increases until they sell their assets and realize the gains. Nobel laureates in economics, including Massachusetts Institute of Technology (MIT) professor Daron Acemoglu and Columbia University professor Joseph Stiglitz, also noted that the income taxes paid by California billionaires from 2019 to 2025 amounted to just 1.6% of their wealth gains over the same period, far below the share of wages ordinary residents pay in taxes.

Opposition Campaign Sweeps Silicon Valley

Leading Silicon Valley business figures, meanwhile, voiced their opposition and poured substantial sums into the campaign. According to The Guardian, Google co-founder Sergey Brin donated at least USD 132 million to the campaign against California’s billionaire tax, while former Google chief executive officer (CEO) Eric Schmidt contributed more than USD 48 million. Other major donors included John Doerr, chairman of venture capital firm Kleiner Perkins; Patrick Collison, CEO of payments company Stripe; and venture investor Vinod Khosla.

Leading Democratic politicians, including California Governor Gavin Newsom and Governor-elect Xavier Becerra, also took a cautious stance on introducing the billionaire tax. Their concern was that a one-time tax on wealthy individuals could encourage them to move to other states, ultimately weakening California’s tax base. Indeed, since late last year, when discussions about the tax gathered momentum, leading Silicon Valley business figures have begun moving their residences or business operations outside California. Google co-founders Larry Page and Brin, for example, relocated some companies they had established in California to other states.

Wealthy Residents Leave California One After Another

Last month, Forbes subsequently reported, citing representatives for Page and Brin, that the two had moved their residences to Florida and Nevada, respectively. Page purchased two homes in Miami for USD 173 million, while Brin reportedly acquired a USD 42 million home near Lake Tahoe in Nevada and registered to vote there. Uber co-founder Travis Kalanick also disclosed in March that he had moved to Austin, Texas, while Meta CEO Mark Zuckerberg purchased a USD 170 million mansion in Florida.

This exodus of wealthy residents is expected to significantly affect actual tax collections. A study released last month by the U.S. National Bureau of Economic Research (NBER) estimated that the assets held by billionaires who had left California for other states accounted for about 30% of the assets originally subject to the proposed billionaire tax. Factoring in the scale of those departures and constraints on taxation, the researchers estimated that actual revenue would total only USD 28 billion–36 billion. That is just about 28–36% of the USD 100 billion initially projected by the proposal’s supporters.

Similar Trend Observed in the United Kingdom

Such departures by wealthy individuals in response to wealth taxation are evident not only in the United States but also in the United Kingdom. According to figures compiled last month by the Bloomberg Billionaires Index, more than 10 billionaires had left the United Kingdom or substantially reduced their ties to the country over the past two years, with combined wealth totaling USD 160 billion. The main wave of departures coincided with the abolition of the United Kingdom’s special tax treatment for non-doms. Non-doms are people recognized as UK residents for tax purposes but whose legal domicile is overseas. Previously, this status allowed them to benefit from the remittance basis of taxation. Under that system, they paid taxes on UK income and capital gains, but income and capital gains generated overseas were excluded from taxation unless remitted to the United Kingdom.

According to HM Revenue & Customs (HMRC), approximately 60,800 non-dom taxpayers lived in the United Kingdom in the 2023–2024 fiscal year, of whom 42,900 used the remittance basis. They paid a total of GBP 7.1 billion in income tax, capital gains tax and National Insurance contributions. But the situation changed sharply when this tax treatment was abolished in April last year. The United Kingdom began taxing foreign income and capital gains based on the length of tax residence rather than legal domicile. As a result, long-term residents under UK tax law became required to report and pay UK taxes on interest and dividends from overseas accounts, rental income from overseas property, and gains from selling overseas stocks, business equity stakes and real estate.

Table 1. Debates Over Taxing the Wealthy in Major European Countries

Debate Spreads Across Europe

Controversy over similar policies is spreading to European countries beyond the United Kingdom. Germany’s Green Party, for example, submitted a proposal in September for a so-called “EUR 500 million tax,” applying rates of 2% to net assets exceeding EUR 500 million, 3% to those exceeding EUR 1 billion, and 4% to those exceeding EUR 10 billion. The plan aims to generate more than EUR 20 billion in additional annual tax revenue. The Left Party also proposed reintroducing a wealth tax on net assets exceeding EUR 1 million, with a top rate of 12% on assets of EUR 1 billion or more, but the federal parliament’s finance committee recommended rejecting it last month. In France, conflict over higher taxes on the wealthy is also intensifying during deliberations on the 2027 budget proposal. The left is calling for a “Zucman tax” (Taxe Zucman) to raise effective tax rates on the ultrawealthy, while the government remains cautious over potential negative effects on investment and economic growth.

In Italy and Norway, erosion of the tax base as wealthy residents move abroad has emerged as a major policy issue. Italy’s government included in its 2027 budget proposal an exit tax that would apply a 26% rate to capital gains when individuals holding at least EUR 800,000 in financial investment assets move their tax residence overseas. However, the wealth management industry and political figures criticized the measure as conflicting with efforts to attract wealthy foreigners and potentially undermining investment competitiveness. The government eventually signaled on the 5th that it might revise the measure. Discussions of tax reform are also continuing in Norway, which already imposes a wealth tax of up to 1.1% on taxable net assets. This year, the Norwegian government raised the tax threshold from NOK 1.76 million (approximately USD 190,769) to NOK 1.9 million (approximately USD 206,154) and made its payment deferral system permanent. In the 2027 budget proposal announced last month, it also proposed adjusting some burdens while retaining the basic structure of the existing wealth tax.