The California wealth tax offers insight into how billionaires handle financial risk

California's Proposed Wealth Tax Sparks Varied Reactions Among Billionaires

• California's plan for a wealth tax has led to differing opinions among the state's wealthiest residents.
• While Larry Page of Google has shifted his business interests away from California, Nvidia CEO Jensen Huang expressed no concern about the potential tax.
• Their choices highlight how affluent individuals weigh financial risks during uncertain times.

This situation is a modern take on the classic "fight-or-flight" response, but with a billionaire perspective.

The introduction of a one-time 5% wealth tax in California has prompted some of the state's billionaires to reconsider their residency if the measure is enacted.

According to Don Hilario, a certified financial planner who advises clients in California, these reactions are largely influenced by each individual's comfort with risk.

The proposed tax would target assets held in California during the 2026 tax year. Reports indicate that Google cofounders Larry Page and Sergey Brin have already moved assets out of the state before the January 1, 2026 deadline to avoid the tax. In contrast, Jensen Huang, CEO of Nvidia, stated he hasn't given the tax any thought.

Huang told Bloomberg TV, "We chose to live in Silicon Valley, and whatever taxes they decide to impose, that's fine by me. I'm completely comfortable with it."

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Hilario, who works with many clients in the tech sector, noted that the uncertainty surrounding the tax can drive people to seek more control over their financial future.

"Those who desire greater certainty may follow Larry Page's example," Hilario explained, "while those with more patience might choose to stay, like Jensen Huang."

Hilario illustrated this with an example: When high-net-worth individuals are considering buying a home during times of economic and interest rate instability, they must decide whether to invest heavily now or wait in hopes of better conditions. The same emotional factors are at play with the wealth tax proposal, as the fear of inaction can be unsettling.

The tax initiative, introduced by SEIU-United Healthcare Workers West to help offset possible cuts to healthcare and education, is still in its early stages. It would require 870,000 signatures to appear on the November 2026 ballot.

Debate Over the Wealth Tax Continues

SEIU argues that California's concentration of billionaire wealth puts the state in a unique position to address both national wealth inequality and local budget challenges.

Beyond Huang, Brin, and Page, other billionaires have also weighed in on the proposal. LinkedIn cofounder Reid Hoffman criticized the plan in a post on X, calling it deeply flawed.

Hoffman stated, "Poorly structured taxes encourage people to avoid them, move their capital elsewhere, and create distortions that ultimately reduce revenue."

Attorney Alex Spiro, who has represented several billionaires, wrote to Governor Gavin Newsom warning that his clients would consider leaving California permanently if the tax is enacted. Hilario added that the ongoing uncertainty—such as how assets would be valued and whether the tax might change—forces wealthy individuals to confront their own risk tolerance.

"Ultimately, the situation remains unclear," Hilario said. "When things are uncertain, investors tend to become more cautious and defensive. Whether you act early or wait it out, it's important to gather information and avoid making choices that can't be undone."

Read the original article on Business Insider.