California voters are set to decide on a proposed billionaire tax as the latest IRS data show significant taxpayer outflows from the Golden State, with thousands of residents and billions in income flowing to other states.

The ballot initiative, backed by the Service Employees International Union, qualified for the November ballot. It would impose a one-time 5% wealth tax on state residents with a net worth exceeding $1 billion, applying retroactively to those who were California residents as of Jan. 1, 2026.

What the Right Is Saying

Billionaire investor Mark Cuban has emerged as a prominent critic of the measure, warning it could drive not only wealthy residents but investment and startups out of California. Cuban wrote on social media that if the measure passes, he would not remain a California resident and would ask startups seeking his investments to relocate from the state.

"If this passes, and it doesn't directly impact me at all, I won't be a Cali resident, but you can bet if I'm investing in a multi billion dollar startup, I'm asking them to move from California first," Cuban wrote. He added that "only idiot startup founders stay in Cali" if the measure becomes law.

Business groups argue the measure could harm California's competitive position as a hub for technology and innovation. Critics warn the retroactive application could face legal challenges and create uncertainty for long-term residents who built wealth in the state.

What the Left Is Saying

Democratic Rep. Ro Khanna of California has defended the proposed measure as a matter of fairness for working families. The proposal's supporters argue it would generate billions in revenue for healthcare and education programs that benefit middle-class Californians.

The Service Employees International Union, which backs the initiative, argues that billionaires can afford to pay their fair share while the state grapples with budget pressures affecting schools and public services. Backers point to polling suggesting broad support among Democratic voters for taxing extreme wealth.

Proponents contend the tax would primarily affect a small number of ultra-wealthy residents and would not meaningfully impact California's broader economy or startup ecosystem. They note that many wealthy Californians would still face lower overall tax burdens compared to other high-tax states like New York.

What the Numbers Show

The latest IRS data compiled from federal tax returns show significant taxpayer outflows from California counties. Los Angeles County led the nation with a net loss of 17,496 tax filers, taking nearly $1.9 billion in income to other states.

Other major population centers also experienced substantial losses: Orange County lost a net 11,618 tax filers; San Diego County lost 9,401; Riverside County lost 8,968; and San Bernardino County lost 8,462 taxpayers. The data represent moves reported on federal tax returns during the most recent available period.

The movement of high-income earners can significantly affect state and local tax collections that fund schools, public safety, and infrastructure. California already imposes some of the nation's highest income tax rates on top earners, with its highest marginal rate exceeding 13% for incomes above $1 million.

The Bottom Line

California's billionaire tax proposal represents a significant test of whether voters will approve new taxes targeting ultra-wealthy residents during an era of heightened economic anxiety. Supporters say it would generate substantial revenue from those most able to pay, while critics argue it risks accelerating wealth flight and deterring investment.

The measure could face legal challenges over its retroactive provisions. How the IRS migration data influences voter attitudes remains uncertain, as supporters note that wealthy departures have occurred for years without such a tax in place. Voters will decide the measure's fate in November, with both sides expecting it to be a closely watched test of state-level wealth taxation.

What to watch: Whether additional high-profile business figures weigh in on either side; how campaigns frame the migration data in their advertising; and whether any legal challenges are filed before Election Day.