Billionaires are fleeing blue states over tax fears

from Dan WaltersCalMatters

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In Rand was a Russian-born writer who immigrated to the United States in 1926, worked as a screenwriter and playwright, and wrote several novels expressing an individualistic philosophy she called “objectivism.”

Rand’s novels and outspoken ideology had been the subject of academic and media debate since the beginning of her literary career, but controversy grew in 1957. the publication of her 1,168-page Atlas Shugged.” The novel describes a rebellion of business executives, inventors, artists, and other accomplished Americans who defy stifling taxes and regulations.

Rand likens the rebels to Atlas, a figure from Greek mythology who holds the world on his shoulders. But in Rand’s book, the characters cast off their burdens and retreat to a remote and unseen valley in Colorado called Galt’s Gulch, named after the leader of the rebellion, John Galt.

This piece of literary history is suggested because we are seeing an exodus of wealthy entrepreneurs from California and other blue states due to regulations and taxes aimed specifically at them.

The most obvious example is the relocation of a handful of California’s 200 or so billionaires to states like Florida, Nevada and Texas in response to the health care union proposed a 5% tax on their wealth by ballot in November. The proposal, if accepted, will generate estimated at $100 billion over four yearsmostly to support health services.

“This extraordinary migration of wealth is changing South Florida: spurring development, tripling real estate prices for trophy properties (even as statewide single-family home prices stagnate here) and increasing demand for babysitters, private chefs, exclusive golf club memberships and private schools,” The Los Angeles Times reported recently.

“They’re trying to kill and eat the golden goose of California tech startups,” said Gary Tan, CEO of startup incubator Y Combinator, in an X post describing wealth tax advocates.

A bigger concern, at least in the Capitol, is that if the billionaires flee, California’s budget will take a big hit in income tax revenue. Top 1% of California taxpayers now delivers almost half of all income tax collections. Governor Gavin Newsom opposes the wealth taxcalling it “really harmful to the state,” saying it would “drive out wealthy residents” and vowing to work to defeat it.

As Silicon Valley tech moguls weigh whether to leave California, they are also pledging tens of millions of dollars to oppose the proposed measure and qualify other measures that would lessen its effects if it passes.

“Of course they’re going to oppose it,” Jack Citrin, professor emeritus of political science at UC Berkeley, told the San Jose Mercury News. “They want to control what they do. They want to live a certain lifestyle. They want to give money to their heirs.”

The exodus of billionaires isn’t limited to California.

The newly elected socialist mayor of New York, Zochran Mamdani, wants the state legislature to introduce a number of new taxes, but Gov. Kathy Hochul is opposedworrying that it could hasten the exodus of wealthy New Yorkers.

“I need high net worth individuals to support the generous welfare programs we have in our state,” she said at a Politico forum last week.

Meanwhile, Washington, one of the few US states without an income tax, is on the verge of introducing one.

Last week, its legislature gave final approval to a 9.9% tax on income of $1 million or moreand Gov. Bob Ferguson says he will sign it. As the tax was looming, Howard Schultz, founder of the Starbucks coffee chain, announced he was moving to Florida. Starbucks headquarters is moving to Tennessee.

It may not be the mass exodus that Rand depicts in Atlas Shrugged, but what is happening certainly reflects the novel’s underlying tension.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.