A wave of new tax proposals is sweeping through deep-blue state capitals, targeting billionaires and high earners with levies so steep that some of the country’s wealthiest residents are already heading for the exits. California, New York, Washington state, Massachusetts, Michigan, and Connecticut are all advancing plans to squeeze more revenue from their top taxpayers, and the early results suggest the strategy may backfire in spectacular fashion, as financial advisor Ted Jenkin detailed in a Fox News commentary.
The proposals vary in structure, but the pattern is the same: states that have spent freely for years now face budget shortfalls and want the richest residents to cover the gap. The problem is that rich people have options, and they’re using them.
The centerpiece of the movement is California’s proposed Billionaire Tax Act, a ballot measure that would impose a one-time 5% tax on the total net worth of anyone worth more than $1 billion who resides in the state. Jenkin, president of Exit Stage Left Advisors, laid out the math: a billionaire with $2 million in liquid assets but a $100 billion paper valuation could face a $5 billion tax bill, a sum that would force the sale of stock, property, or entire business stakes just to pay the government.
Six of California’s 214 billionaires left the state before the proposed January 1, 2026, residency cutoff. Those six departures alone carried an estimated $27 billion in potential tax revenue out the door.
The names attached to the flight are not obscure. Google co-founder Larry Page dropped $170 million on a Miami estate and moved his family office out of California. David Sacks, who had lived 30 years in the state, packed up for Texas. He described the proposed levy as “asset seizure.”
The top 1% of California taxpayers currently supplies nearly half of all income tax collections in the state. When even a handful of those taxpayers leave, the revenue hole doesn’t shrink, it grows.
The California fight has opened a visible crack inside the Democratic Party. Sen. Bernie Sanders traveled to Los Angeles to campaign for the billionaire tax ballot measure, AP News reported.
Sanders framed the issue in characteristically blunt terms:
“The billionaire class cannot have it all. This nation belongs to all of us.”
Gov. Gavin Newsom sees it differently. He is strongly opposing the proposal, warning it could hurt California’s competitiveness and worsen the state’s finances. The Washington Times reported that Silicon Valley is in an uproar, with tech titans threatening to leave if the measure advances.
UC Berkeley political scientist Eric Schickler captured the intra-party tension plainly:
“Having an issue like this where Newsom and Sanders, among others, are on different sides is not ideal.”
It is not ideal, but it is instructive. When even a Democratic governor warns that a Democratic tax proposal will damage his own state, the policy has a credibility problem that no amount of populist rhetoric can paper over. The party’s internal fracture over fiscal policy mirrors broader escalation within Democratic ranks on multiple fronts.
Washington state just passed a 9.9% tax on incomes over $1 million. The moment that bill cleared the legislature, Starbucks founder Howard Schultz announced he was moving to Florida. Then Starbucks’ own headquarters announced it was relocating to Tennessee.
Think about that sequence. The state passed a tax aimed at the wealthy. Its most famous corporate founder left. Then the company itself left. The state got neither the billionaire’s income taxes nor the corporate headquarters’ economic footprint.
Washington had long attracted high earners precisely because it had no state income tax. The new levy changed the calculus overnight. Jenkin noted that the exits happening now were decided in law offices and financial planning meetings 18 months ago. The exits that haven’t happened yet are being decided right now.
Michigan wants to go further still, proposing to amend its state constitution to impose a 9.25% top rate on incomes over $500,000. For residents of Detroit, the combined state and local rate would approach nearly 12%.
Compare that to neighboring states. Ohio’s flat income tax rate sits at 2.75%. Indiana’s is 2.95%. A Detroit business owner staring at a 12% combined rate can drive a few hours in any direction and cut that burden by more than two-thirds. The math is not subtle. The incentive is not theoretical.
Several of these state proposals also include exit taxes on residents who leave within five years of implementation, a mechanism designed to trap wealth inside state borders even after the taxpayer has moved. That feature alone signals how clearly these legislators understand the flight risk. They are building walls not to keep people out, but to keep money in.
The approach recalls the kind of political turmoil Democrats are generating across multiple arenas. Lawmakers in competitive districts are already under pressure from voters who see their representatives struggling to hold a coherent line on economic and cultural issues.
The destinations are no mystery. Florida, Texas, Tennessee, and Nevada, all states with no income tax or dramatically lower rates, are absorbing the capital, the entrepreneurs, and the jobs that blue states are pushing away. Jenkin, who has spent over thirty years as a financial advisor, wrote that these states are becoming magnets for innovation and job creation.
At least six billionaires have already left California for lower-tax states such as Texas and Florida, the Washington Examiner reported. The pattern is not limited to the ultra-wealthy. High earners, small business owners, and remote workers with geographic flexibility are all making the same calculations.
The consequences extend well beyond the individuals who leave. When a billionaire departs California, the state doesn’t just lose that person’s income tax payments. It loses the capital gains taxes generated by their investments, the property taxes on their homes, the sales taxes from their spending, and the economic activity created by their businesses and employees. The ripple effect touches public schools, infrastructure budgets, and social services, the very programs these tax proposals claim to fund.
This is where the story stops being about billionaires and starts being about everyone else. When wealthy residents flee and revenue projections collapse, state governments face a choice: cut spending or raise taxes on the people who remain. History suggests they choose the latter.
California’s dependence on its top 1% for nearly half of all income tax revenue makes the state uniquely vulnerable. A handful of departures can blow a hole in the budget that middle-class taxpayers are then asked to fill. The same dynamic applies in Washington, Michigan, and every other state chasing the same strategy.
The political instability this creates is not confined to state capitols. Federal Democrats watching the California fight understand that a visible, high-profile failure of progressive tax policy in the nation’s largest blue state would carry national implications. The same party that has struggled with internal disruptions on Capitol Hill now faces a fiscal credibility test in its most important state strongholds.
Jenkin’s core argument is straightforward: these states believe the solution to self-inflicted budget crises is to reach deeper into the pockets of their most productive residents. But productive residents can move. And when they do, the burden shifts to the people who can’t.
The inclusion of exit taxes in several proposals deserves particular scrutiny. These provisions would penalize residents for leaving a state, effectively imposing a financial penalty on the exercise of a basic freedom of movement. The constitutional questions are obvious. The practical message is worse: stay and pay, or leave and pay anyway.
David Sacks called it “asset seizure.” That phrase may be blunt, but when a state proposes to tax the net worth of residents, not their income, not their realized gains, but the paper value of everything they own, and then threatens to tax them again if they try to leave, the description fits the mechanism.
The broader pattern across government overreach into private financial affairs should concern every American who believes the state’s power to tax has limits.
Blue state leaders are conducting an experiment in real time: how hard can you squeeze the wealthy before they leave? The early data is in, and it is not encouraging for the squeezers. California has already lost six billionaires and $27 billion in taxable wealth before the ballot measure has even passed. Washington lost its most famous corporate citizen and a major corporate headquarters. Michigan is proposing rates that would make it uncompetitive with every neighboring state.
None of this is surprising to anyone who has watched tax policy play out over decades. Capital goes where it is treated well. Punish it, and it moves. The people left behind, the teachers, the nurses, the small business owners, the retirees on fixed incomes, are the ones who end up covering the shortfall.
The wealthy will be fine. They always are. It’s everyone else who should be worried.
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