Chamath Palihapitiya, a prominent Canadian-American billionaire of Sri Lankan origin, is contemplating a move away from California. He joins a growing chorus of wealthy entrepreneurs expressing deep concern over the state's business climate and proposed tax policies, particularly a controversial wealth tax.
The Push Factor: California's Proposed 'Billionaire Tax'
Palihapitiya has been vocal in criticising a specific legislative proposal that is causing anxiety among California's ultra-rich. The proposed wealth tax, which could be put before voters in November 2026, would impose a 1.5% annual levy on the net worth of residents exceeding $1 billion. While supporters argue it is a necessary measure to fund public services, critics like Palihapitiya see it as a direct threat to the state's economic engine.
In a pointed post on social media platform X, the venture capitalist argued that such a tax would trigger "an exodus of the state’s most talented entrepreneurs". He claimed that individuals he knows, with a staggering combined net worth of $500 billion, have already relocated. Palihapitiya warned of a grim outcome where the departure of the wealthiest would leave the tax burden to fall more heavily on the middle class.
A Wider Silicon Valley Exodus Trend
The 49-year-old investor, famous for his early role at Facebook and for founding Social Capital in 2011, is not alone. His comments reflect a broader unease within California's tech elite. Tesla CEO Elon Musk has previously warned that the proposed tax could force him to move his wealth and operations elsewhere. Similarly, tech investor and PayPal co-founder Peter Thiel has suggested that such policies make California less attractive for living and investing.
This potential migration is largely oriented towards so-called "Red states" like Texas, which are perceived to offer a more business-friendly environment with lower taxes and less regulation. Palihapitiya explicitly stated that innovators and founders are actively thinking about such relocations.
Political Divide and Economic Consequences
The debate over the wealth tax has created a clear political divide. Even California's Governor, Gavin Newsom, alongside other state officials, has criticised the measure as potentially harmful to the economy. However, its supporters continue to advocate for it, setting the stage for a major policy battle.
The discussions occur at a critical time for California's technology sector, which is facing questions about its long-term growth and stability. The fear is that driving away high-net-worth individuals and the companies they build could have a cascading negative effect on job creation, investment, and the state's overall fiscal health.
Palihapitiya, whose investments span technology, healthcare, and artificial intelligence, represents a influential voice in this debate. His potential departure would symbolise a significant loss of capital and entrepreneurial talent for California, underscoring the high stakes of the state's policy decisions.
