TAIPEI, TAIWAN – JUNE 02: NVIDIA CEO Jensen Huang delivers a speech during a keynote event at COMPUTEX on June 02, 2026 in Taipei, Taiwan. Running June 2–5 across four venues in Taipei’s Nangang and Xinyi districts under the theme ‘AI Together,’ the annual trade show has drawn more than 1,500 exhibitors and industry heavyweights including NVIDIA CEO Jensen Huang to showcase next-generation AI chips, robotics, and computing infrastructure, cementing Taiwan’s role as the world’s pre-eminent hub for semiconductor and AI supply chain innovation. (Photo by Cheng Chia Huang/Getty Images)
Cheng Chia Huang/Getty Images
One of the richest men in Silicon Valley was handed a reason to panic and calmly dismissed it. Asked about California’s Prop 40, the one-time 5% tax on billionaire wealth that would cost him nearly $8 billion, Nvidia’s Jensen Huang told Bloomberg Television: “We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it. I’m perfectly fine with it.” His reason was economics. Nvidia stays because “that’s where the talent pool is.”
That one sentence answers the central claim of the tax’s opponents, and it came from a man with much to lose. Billionaires likely will not leave California because of a one-time 5% tax.
The Best Case That Billionaires Will Flee
The opposition’s strongest argument that billionaires will leave comes from one principal source, the conservative Hoover Institution’s Joshua Rauh. Using two decades of California tax filings, Rauh finds top earners are the state’s most mobile taxpayers, with departures spiking after tax changes in 2012 and 2017 and during the pandemic. He estimates Prop 40 would collect about $40 billion, not the $100 billion supporters project, and would leave the state $25 billion poorer over time as departed billionaires stop paying income tax. He makes a crucial and questionable assumption that no billionaires will be created nor will billionaires migrate to the state after the one-time tax is imposed. Rauh warned the tax could “liquidate Silicon Valley.”
Billionaires Moving to Avoid Tax Is Harder Than It Looks
Start with the fine print. The tax would apply to anyone who was a California resident on January 1, 2026. Brin now claims Nevada. Larry Page decamped near Miami. Peter Thiel bought a Buenos Aires mansion, leaving California just ahead of the deadline. But a new mailing address is not a tax escape. California’s Franchise Tax Board decides residency on facts, not paperwork, and it litigates. Billionaires who left after the deadline still owe. Those who timed their exits can expect years of audits proving they really left.
What Massachusetts Teaches About Rich People Leaving
The exodus theory got a real-world test. In 2022, Massachusetts voters passed a permanent 4% surtax on incomes over $1 million. This is a permanent tax, unlike California’s one-time proposal. And a permanent tax is more likely to change behavior than a one-time tax would. Furthermore, millionaires should be more sensitive to tax differences between states than billionaires.
Three years later we can see how the wealthy respond to a tax. Standard economic theory says a large enough tax wedge – the difference between tax rates in one jurisdiction compared to another – will induce some residents to relocate and revenue will fall way below predictions. And the opponents of the Massachusetts millionaire tax used economic theory to predict exactly that.
But the opposite happened. The wealthy stayed and paid. The surtax raised $5.7 billion in its first two full fiscal years, roughly double the forecasts, funding free school meals, free community college, and bridge repairs. And the millionaire population grew rather than shrank: the progressive Institute for Policy Studies reports the number of millionaires in Massachusetts rose 38% from 2022 to 2024, with their combined wealth climbing from $1.6 trillion to $2.2 trillion.
Business groups dispute its millionaire counts. But revenue coming in at double the projections is not disputable and cannot happen if the tax base runs away. The absence of dire consequences is what a neutral academic assessment expected: a Tufts University analysis predicted modest attrition of millionaires and large gains in revenue.
Here is a careful conclusion: if a permanent, annual surtax did not chase millionaires out of Massachusetts, a one-time levy is an unlikely trigger for a billionaire stampede out of California. As I wrote in an earlier column on wealth taxes and migration, the Swedish evidence from economists Emmanuel Saez and David Seim found the same pattern: negligible migration in response to a wealth tax. Paper moves. People mostly don’t.
The Work the Billionaires Could Have Done for California
Some billionaires, Google’s Sergey Brin, for instance, are spending hundreds of millions to fight the tax. Brin’s 5% one-time surcharge on his wealth would be over $13 billion against a fortune of $276 billion, payable over five years. But consider his wealth has grown about $26 billion this year alone, roughly twice the bill. Neither Brin, nor any other billionaire opposed to the tax, has explained what they would be unable to buy, build, or fund after paying.
Advocates for the billionaire tax proposal are motivated to solve a humanitarian problem. The 2025 budget law — the so-called ‘One Big Beautiful Bill’ — is projected to cut as much as $30 billion a year in federal Medicaid funds from California, according to the California Budget & Policy Center and state officials. A New School, Wealth Equity Lab policy note frames the ballot fight as a long-term-care financing question: more than half of adults who reach 65 will need paid care, Medicare doesn’t cover it, and Medi-Cal — the program the billionaire tax would backfill — is what catches middle-income families after their savings run out.
Governor Newsom spent four months in quiet talks with the union behind the measure searching for an off-ramp. The same union publicly called on the state’s 200 billionaires to also work together to find a solution to the Medicaid hole. No billionaire stepped up.
Huang answered the question at the center of this fight, which is whether paying the tax would actually hurt the people who owe it. Huang, facing one of the largest bills of anyone, said he’s perfectly fine with paying it. Though some of his fellow billionaires together are spending well over $100 million to fight the measure, they haven’t answered the question about how the billionaire tax would hurt them.
Billionaires likely won’t leave California if Prop 40, the one-time California billionaire tax, is passed. In contrast, if Prop 40 passes millions of people hurt by the federal tax cuts for billionaires will be helped.