If I was a billionaire, I’d consider leaving California, too

If the 1% start a tax revolt in California, so be it

For regular readers of the all aspect report who may have wondered all this time, I’ll come clean: I am not a billionaire. I am not currently in the market for an estate in Bel Air, a Gulfstream G700 or a custom oceangoing yacht. My invitations to Davos and Sun Valley somehow get lost in the mail every year. Marc Andreesen seems to have misplaced my phone number, and Mark Benioff apparently chose another direction. Hey, their loss.

Kidding aside, while I’m not a billionaire, I am a California taxpayer. As such, I can understand why some billionaires are threatening to leave the state, and some already have, in response to the proposed California Billionaire Tax Act. At a certain point, someone has to say “enough.” Enough with some of the highest income taxes in the country, the highest sales taxes, the highest gas taxes. Enough with the fees, levies and assessments. Enough with the tolls. The political class brays about affordability, then charges a worker $42 a week for the privilege of crossing the Bay Bridge to get from his home in the East Bay to his job in San Francisco. For a worker in a larger truck it can be as much as $200. If billionaires lead the revolt, so be it.

People don’t become billionaires, much less remain billionaires, by being bad with money. They know how to suss out good investments while steering clear of bad ones.

These days, California is a lousy investment, and it’s not for lack of taxing and spending. Consider: California’s 2015 state budget was, as close as makes no difference, $170 billion, or $232.5 billion in today’s dollars. The 2025 state budget is $321.1 billion, a 40% increase when adjusted for inflation. Over that same period the state’s population increased by just 2.6%, from 38.5 million to 39.53 million.

If anything, the billionaires stuck it out longer than a lot of other people. Over the last 15 years the state experienced a net outmigration of some 2.5 million middle class and higher earners. The state’s overall population grew as a result of immigration. It’s extraordinary how many people who lived here decided to leave. Last year, for the sixth consecutive year, California ranked last in the U-Haul Growth Index, which compares the number of one way rentals into and out of states. Suffice it to say, you’d be hard-pressed to find a billionaire who uses U-Haul to move. 

Here’s a fun fact: Supporters claim the billionaire tax will raise $100 billion over five years. If the political class had lived within its means and kept the state budget in line with inflation over the last decade, this year it would be — wait for it — just over $100 billion lower. With a modicum of fiscal discipline, the state would have saved $500 billion over the next five years.

It’s 10 p.m., do you know where your tax dollars are?

The tax supposedly will go to fund public education, food assistance and Medical. Uh-huh. If there’s one thing Californians know, it’s that their tax dollars rarely get spent as promised. Also, the measure is sponsored by the rapacious Service Employees International Union. If you think their leadership gives a fraction of a rip about education and food assistance, I have a bullet train in Fresno to sell you.

I’m not suggesting that billionaires deserve sympathy. I’m suggesting that it isn’t Larry Page’s fault that California’s political class have so catastrophically mismanaged the state’s budget for so long that they’re in this fix. I’m suggesting that maybe, just maybe, if the state hadn’t lost $24 billion in homeless spending over just five years, or lost $30 billion to unemployment fraud during the pandemic, or essentially lit $14 billion on fire to not build a bullet train, or not chased those 2.5 million taxpayers out of the state, taking anywhere between $40 and $100 billion in tax revenues with them, or not grown the state budget by 40% while the population remained essential flat, we wouldn’t need to try to dip into Larry’s pocket.

Mr. Franklin looks justifiably unhappy.

I’m also suggesting that it’s maybe not the best idea for a state that relies disproportionately on tax revenue from the ultra wealthy to demonize the ultra wealthy. That’s not a great message to send to the next generation of potential entrepreneurs, especially when the likes of North Carolina, Florida, Georgia, Texas, Arizona, Nevada and elsewhere are rolling out the welcome mats.

Meanwhile, what have Californians gotten for the existing massive spending increase?

Virtually every aspect of life in the Golden State has gotten worse. In 2015 the state’s homeless population was around 116,000. Last year it was 131,000. Despite spending tens of billions on mass transit, the state continues to rank in the bottom third of transit quality. Despite an environment that’s extremely conducive to wind and solar, and despite sitting on the third largest proven petroleum reserves in the country, we rank third to last in energy production, and second to last in energy costs. In 2015, the median price of a home was around $500,000. Last year it was over $900,000, and climbing fast.

We also have the country’s largest homeless population, by far, the widest chasm between the wealthiest and the poorest and among the worst poverty levels in the country. Our public schools are shameful bastions of failure and hopelessness, routinely graduating hundreds of thousands of high school seniors —- the vast majority of them non-white — who can barely read, write or reckon. Over the last 20 years California has created five part time or low wage jobs for every good paying middle class one.  California is consistently ranked at or near the bottom of states that are hospitable to business.

The media have dutifully — not to mention predictably — been in full snark mode. Someone called Lorraine Ali, who apparently writes for the Los Angeles Times, priggishly asked, “If the tax should be voted into law, what would it mean for those poor tycoons who failed to pack up the Lamborghinis in time?”

As Governor Gavin Newsom and the rest of the political class never tire of reminding everyone, California is the wealthiest state in the nation and the fourth largest economy in the world. We’re home to more billionaires than any country in the world except for the United States and China. There’s a reason for that. Now we risk killing the golden goose.

Economic jealousy is easy politically. It’s a cheap shot. But the fact is, the economy needs billionaires.