Billionaire departures could cost California's wealth tax $29bn of the $100bn it seeks

Divide $29 billion by 5% and about $580 billion of net worth has changed address ^[1][3][1]. Divide the $100 billion target the same way and Proposition 40 is written against a base near $2 trillion of billionaire net worth ^[1][3][2]. The estimated leakage is 29% of the goal ^[3].

The measure, as Fortune describes it, reaches billionaires who were California residents at any point after Jan. 1 this year ^[1]. Fortune does not date the moves by Larry Page, Sergey Brin or Peter Thiel ^[4]. On that residency test a departure this year does not obviously escape the bill, so whether the $29 billion is beyond reach or merely hard to collect turns on when each move was dated ^[3].

Wealth taxes fall on assets like stocks, real estate and art, not on income, which is MIT Sloan's distinction as cited by Fortune ^[9]. Of Florida's three exemptions, the capital gains one recurs. Forbes estimates Larry Ellison saved about $1 billion in taxes by making a Palm Beach County estate his primary residence before selling Oracle stock ^[8], and the estate is 16 acres in Manalapan, about 10 miles from Mar-a-Lago ^[18]. The 5% net worth levy is collected once ^[1], while a zero rate on gains applies to the next sale and the one after it ^[7].

The migration numbers predate the taxes. Henley & Partners has Miami's millionaire population up 94% in a decade to nearly 40,000, from about 20,600 ^[16][5], and West Palm Beach and Palm Beach up 112% between 2014 and 2024, the fourth-fastest growth of any city in the world ^[21]. That window closes before Washington's 9.9% begins in 2028 and before Prop 40's January residency date ^[6]. The Business Development Board of Palm Beach County counts roughly 60 billionaires in the county ^[22].

Nineteen of Florida's 20 richest billionaires officially reside in Miami ^[11], and Mark Zuckerberg, Page and Thiel all live on Indian Creek ^[13]. The spending there is illiquid. Jeff Bezos has assembled a compound at Indian Creek worth more than $230 million ^[12], Ken Griffin has put about $450 million into a waterfront compound in Palm Beach County ^[19], and Page more than $180 million into Coconut Grove ^[15], for a combined total of at least $860 million of Florida property between three men ^[4]. Griffin moved Citadel's headquarters to Miami ^[14], and Citadel, BlackRock and Goldman Sachs have all expanded in Palm Beach County, nicknamed Wall Street South ^[20]. "It's one of the best cities in the entire world," Miami developer Robert Rivani told Fortune. Rivani said it is a great place to live, with a political landscape that suits people who want to expand and raise families, that this leads to strong real estate growth, and that all the big guys are moving down there ^[17].

In my view the durable variable is the permanent zero on gains. A one-time levy invites a single change of address, and after the move the state collects nothing on the sales that follow ^[1][7]. Two findings would overturn that. If Proposition 40 passes and California collects close to its $100 billion off a residency line dated Jan. 1, the snapshot held and the address change bought less than it appeared to ^[1][3]. If the named departures turn out to be dated to this year, the levy moved them and the gains exemption is a second-order attraction ^[1][4].