At least six billionaires have left California before the new year due to a proposed 5% wealth tax, with more expected to follow.
Financial advisers, including David Lesperance, who specializes in relocation, have helped several billionaires relocate ahead of the bill’s January 1 residency cut-off date. Among those who have left are Peter Thiel, who moved to Miami, and David Sacks, who relocated to Austin, Texas, as reported by Bloomberg.
The proposed tax, which targets approximately 200 billionaires in California, aims to generate $100 billion to offset federal health care cuts. Suzanne Jimenez, chief of staff of SEIU-United Healthcare Workers West, defends the tax as a “commonsense” measure, stating that it would be imposed only on the wealthiest residents. However, critics argue that such a tax could drive billionaires out of the state, potentially harming California’s economy.
Governor Gavin Newsom has expressed concerns about the potential exodus, warning that a state-level wealth tax could lead to a “race to the bottom.” He has opposed the measure, emphasizing the competitive environment among states. San Jose Mayor Matt Mahan echoed these concerns, stating that the tax could negatively impact California’s innovation economy.
Despite these warnings, Jimenez maintains that tax-driven migration among the wealthy is limited, citing examples from other states where similar taxes have been implemented without significant departures. The measure’s supporters plan to collect the necessary signatures to qualify it for the state ballot in November.
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