Venture capitalist Chamath Palihapitiya has warned that California’s proposed billionaire tax may be driving a growing number of wealthy residents to leave the state — a trend he believes could deepen, rather than alleviate, the state’s financial troubles. According to Fox Business, Palihapitiya, who closely follows patterns of wealth migration, estimated that California has already lost about $1 trillion. In a post on X, he said that around half of the state’s billionaire wealth has moved elsewhere, taking with it substantial income, sales, and property tax revenues as well as jobs and salaries tied to that wealth.

"We had $2T of billionaire wealth just a few weeks ago. Now, 50% of that wealth has left - taking their income tax revenue, sales tax revenue, real estate tax revenue and all their staffs (and their salaries and income taxes) with them," Palihapitiya wrote on X, Fox Business reports.

Although the proposal is still being evaluated for inclusion on the November statewide ballot, some Silicon Valley leaders have expressed concern that it could encourage more founders and investors to relocate. California, home to one of the country’s largest concentrations of billionaires, has long depended on this group to generate a significant portion of its tax base.

Palihapitiya cautioned that losing this revenue could place additional strain on the state’s finances. “Unless this ballot initiative is pulled, we will not stop the billionaire exodus. With no rich people left in California, the middle class will have to foot the bill,” he said.

The proposed initiative, backed by the Service Employees International Union–United Healthcare Workers West, would apply a one-time 5% tax on Californians with assets above $1 billion. Supporters contend that the measure could help fill gaps created by federal healthcare funding cuts.

Governor Gavin Newsom reportedly stated in December that he does not support the plan, and urged people not to panic over the proposal. Speaking at The New York Times DealBook conference at the time, he said “it's not something to be panicked about, but it's part of the broader concern and narrative that's developed in this country of the haves and have-nots, not just income inequality, but wealth inequality.”