California Plans Residency Audits for Billionaires Over Wealth Tax

The California Franchise Tax Board is launching residency audits to determine if billionaires who relocated out of state sufficiently severed ties to avoid the proposed 2026 Billionaire Tax Act, also known as Proposition 40. The measure, facing a November statewide referendum, would impose a one-time 5% levy on global net worth exceeding $1 billion for residents as of January 1, 2026. Primary targets include Google co-founder Sergey Brin, Uber co-founder Travis Kalanick, and venture capitalist David Sacks. State investigators intend to review vehicle registrations, bank accounts, and school enrollments to verify residency status.

Proponents estimate the tax could raise approximately $100 billion for public education, food assistance, and healthcare. Senator Bernie Sanders has advocated for such taxes to address wealth inequality. However, Governor Gavin Newsom has opposed the proposal. Public polling remains conflicted, with some data showing support in the low-to-mid 40 percent range, while other reports suggest a 2-to-1 margin of support.

Opponents argue the tax will trigger an exodus of innovators. Venture capitalist Chamath Palihapitiya warned that founders with high valuations but low salaries could face tax bills as high as $50 million, claiming the law will drive entrepreneurs to start companies outside of California. Legal experts anticipate the audits will lead to prolonged court battles over residency disputes.