California Wealth Tax BACKFIRES, Triggers COLLAPSE And EXODUS From State
California’s 1.5% wealth tax on billionaires—part of the $100B healthcare fund targeting unrealized gains like stocks or Pokémon cards—has already spurred a cryptocurrency HQ exodus and Mark Zuckerberg’s departure, risking a budget collapse via the "laughter curve" as 200 ultra-rich residents flee or restructure assets. Critics argue it forces liquidation of illiquid holdings, destabilizes markets, and punishes retirees and small business owners, while Democrats blame systemic homelessness on mental health and addiction, not resources. Millionaire Scott Ellis’s support for higher taxes is dismissed as likely exploiting loopholes; if the policy fails, other states may follow within five years, deepening economic strain. [Automatically generated summary]
Another day, another California Democrats pass bill that damages the state and causes people to leave.
I remember doing a story several years ago about how bubonic plague actually had reemerged in Los Angeles because the homeless crisis was so bad, people were living in disgusting filth and squalor.
People actually got bubonic plague.
It's kind of crazy.
You'd think it'd be gone, but it's not.
Well, another big issue is this.
California just passed their wealth tax.
And now we are seeing moneyed individuals leave and they are already projecting, I kid you not, a budget shortfall.
For those that aren't familiar, a wealth tax is taxing unrealized gains, which let me break it down for you.
If you own a thing and someone else believes it's worth money, you now owe the government.
A simple way to put it is, if you bought a Pokemon card for $50 and then next year a website says that card is worth $500, then the government says you just made $450 of wealth and we are taxing that wealth.
The only problem is you don't have any money.
You just have a Pokemon card.
So how do you actually pay it?
You got to sell it off.
This works very similarly to property taxes, which many people have pointed out.
Over the long run results in legacy landowners having to sell off their land, break it up piece by piece to cover taxes on something that doesn't actually generate money for them.
And thus, powerful individuals are leaving the state.
It's going to trigger a budget shortfall.
I don't know what California thinks it's going to do, but this, my friends, is why taxation is not so simple.
So we're going to break all of this down for you.
And I love to introduce you to something called the laugher curve.
This idea that if you increase taxes, you decrease tax revenue.
But see, as many of these Democrats don't know or care, they simply say, listen, I want to get elected.
I'm going to tell the people what they want to hear.
If you tax people, you make money.
If you tried to explain to the general public the laugher curve, many of these people are going to be like, dude, I don't even know what you're talking about, man.
Just take their money from them and give it to me.
And you're going to be like, listen, they'll just leave.
I can't do that.
They'll say, what?
California tried at one point passing a law to tax individuals who had lived in the state within the last 10 years.
That's right.
You move out of California, you're broke.
You move to Florida, get a job, make money, and California goes, you owe us.
And you're like, what?
I don't live there.
They tried this.
I kid you not.
They tried doing that because they know increasing these taxes will result in the exodus.
Welcome, my friends, to the failure that is California.
But let's talk about this.
And I got to warn you, they say that what happens in California happens to the rest of the country five years later.
Will we hold off?
I'm not entirely sure.
The only time is breaking down the billionaire tax and the exodus.
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Let's start here, my friends.
The backlash.
A cryptocurrency company sparks backlash with sudden HQ change.
Who in their right mind?
Additionally, Mark Zuckerberg also fled the state, but who can blame him?
I want to show you this.
This is the Citizen X wealth exodus.
Let's open this up and zoom in on it so it's easier to see.
Mapping U.S. millionaire migration, inflows and outflows.
As we can see, Florida is enjoying a massive influx of millionaires.
Property value is going to skyrocket.
The state is going to make bank.
Now, Florida does not have an income tax, the personal level, but their property taxes are very high.
Property taxes are functionally wealth taxes all the same.
So it's interesting as to why wealthy people are leaving these places.
Well, the truth is, you don't need to be a landowner to live in Florida.
You can lease or rent.
And if you're making millions of dollars, hey, you're in a good position.
You got a comfortable state, good freedom, you got conservative governance, and they're letting you keep your money and you don't have to be a property owner.
So you don't have to see those taxes.
The problem with California and the wealth tax is your wealth is largely coming from your business ownership and you're not sitting on liquid U.S. dollars.
So what happens when you buy a million dollars in stock to store your money in an investment as a wealthy individual?
That stock doubles in price and then California walks over and says, now you owe us money on that.
You're going to be like, I don't have the money.
It's in a brokerage account as a stock.
I bought a thousand shares.
I got a thousand shares.
They're going to say, sell it or else.
That is what makes no sense.
So here's what you see.
This is from the cooldown.
They say a cryptocurrency company has ignited debate after relocating its headquarters out of California due to a proposed wealth tax that some believe will be bad for business in the state.
Some believe will literally be.
Guys, all you got to do is look up the laugher curve.
There's a story that I've told about a friend.
My friend's dad, when I was late teens, you know, I think I was like 19, contractor.
I don't know how it came up, but he was talking about, oh, I remember Cook County increased their sales tax by like a fraction of a percent.
And he said, that just nuked tax revenue in the county.
And I said, how so?
Cook County had a Home Depot.
This is the story that I was told.
I never actually like researched what close.
Cook County raised their taxes.
They had a Home Depot, shut down, reopened three miles down the road, costing them tens of millions of dollars.
And I said, that seems stupid.
Why would they do that?
And he says, well, here's the thing.
Contractors make massive orders, hundreds of thousands of dollars in materials and lumber through Home Depot, who then delivers it.
If you're going to pay an extra fraction of a percent, you could be looking at numbers from $5,000 to $50,000 per year, and you don't want to spend that money.
So if there's a Home Depot in Cook County and the taxes go up, the contractors will absolutely order in due page even 20 miles away because the drive of 20 miles means literally nothing when you're doing order for millions of dollars in lumber and materials.
So Home Depot shut the store down and reopened several miles down the road just to be in a different county because they knew they would lose all of their customers.
And guess what happens in the end?
Cook County does not get that tax revenue anymore.
Meaning they raised the taxes and the tax revenue went down because they lost customers.
It's kind of obvious.
Imagine you have an ice cream shop and you charge $20 for a sweet ice cream.
Nobody will go there.
They will drive an extra 15 minutes if it means the rice cream is going to be $4.
Same thing.
Cook County has residents.
They're customers.
They're not going to buy and give you a portion of the revenue.
This is what's happening to this cryptocurrency company.
They said the move comes as California considers a ballot initiative that would impose a one-time tax, 5% on residents worth more than $1 billion.
The Billionaire Tax Act is still gathering signatures, but it's already sparked pushback from some business leaders.
If approved, it would apply to roughly 200 of the state's wealthiest residents and could raise an estimated $100 billion, much of which would go towards healthcare.
Now, I'm going to tell you this.
You're worth $1 billion.
And they say, we're going to take 5% from you.
I'm asking myself, why am I going to give you $50 million, mind you, and I don't even have the cash?
That's the problem.
You can't, it's impossible.
They say if approved would apply to roughly 200 of the state's wealthiest residents, this mirrors efforts around the world to raise taxes for the ultra-wealthy.
BitGo's relocation has drawn attention because the company is preparing for an IPO targeting a valuation of nearly $2 billion.
Well, the finale doesn't state why the company moved.
CEO Mike Belshi has criticized the proposed tax, saying who in their right mind would found a new business in California if California does this-ish?
Those in favor of the tax say fears of max exodus are overblown because most billionaires haven't taken steps to leave.
Uh-huh.
How about this from the New York Times?
Move your Picasso's, get a divorce, strategies for California billionaires.
Yet they're absolutely preparing a mass exodus and manipulation of the markets and value.
I hear this from so many of these leftists, but you're not a millionaire, billionaire.
What do you care for, right?
You're not a millionaire or a billionaire.
So why do you care?
Because inflation.
Inflation.
You know what's fascinating?
A million dollars.
What was I watching recently?
I can't remember a movie from the 70s.
And it was like rent was like $100 a month.
It's been a long time.
You know what I mean?
It's 2020.
It's been 50 years.
And rents now are $3,000.
So that's a 30X increase in 50 years.
30X on rent.
So let's just do the math and say in 50 years, rent will be $90,000.
And you're saying, that's insane.
$90,000 a month for rent?
I kid you not.
Let's go back to the 70s when rent was a couple hundred bucks, not even.
Actually, let me make sure I get the numbers right.
Let's get the numbers right.
How much was average rent in 1970?
The average rent was $108.
$108.
Okay?
Let's do this.
The average rent today in 2026 is, okay, to be fair, it's 10x.
1,693.
I'm thinking in cities.
Okay, okay.
So it's about a 15, 15 times, okay, $45,000 per month in 50 years, per month, which means how much money will you have to make per year if $45,000 is supposed to be a quarter of your rent?
Holy smokes, a quarter per month, right?
They expect you to be making about a million to $2 million per year to pay that rent.
Okay, and that's in 50 years.
My point is this.
If you were making $100,000 a year in the 70s, a six-figure income, now 15 times that, 15 times that.
A millionaire today, if you make $1.5 million per year, it's the equivalent of a six-figure income in 1970.
So when they say we're only taxing the wealthy, yes, but it's insidious, okay?
And I mean that true sense, slowly creeping and encroaching because these rules don't get changed for inflation.
Sooner or later, you will live in a country where people do everybody's average income.
Oh, the average income is $783,000 a year.
The average, median.
And they're like, I'm broke.
I only make $800,000.
Imagine today going to the 1970s and being like, I just can't afford my bills.
I only make $60,000 a year.
It's crazy, right?
But that's the point.
When they first introduced income tax back in the day in the early 1900s, it was like a 3% tax only on the ultra-wealthy.
Now it's 30% on everyone.
Here's what the New York Times says.
At a waterfront resort in Newport Beach, California, a tax lawyer took the stage in a conference room to deliver some advice.
A couple hundred wealth advisors had gathered over boneless short ribs and striped bass to learn about a sudden hot topic, a proposed tax on billionaires.
Laughter rang out as Mr. Katzenstein, a partner at Holt House Carlin, explained that a married couple worth slightly more than $1 billion would be subject to the tax, but that neither spouse would have to pay it if they split up and divided their assets.
Indeed.
If they can bring their assets below a billion, they would not be subject to the proposed tax.
Otherwise, they're looking for ways to shield much of their wealth as they can.
Indeed, my friends, it's not just about the exodus.
It's about the fact that they're not going to be subject to this in the first place.
Now, don't get me wrong, what, 100 years from now, people will all be billionaires?
Sure, I guess, maybe.
The issue is that they are going to damage their economy.
And the end result is, well, I have some sources for you.
Where's my, here we go.
Little to gain by raising taxes on the rich by the editorial board of the New York Post published this month.
You're not going to make money.
The laugher curve.
Everyone knows there's a trade-off between the top rate and revenue, familiarly known, familiarly, known as the laugher curve, but experts don't agree on how it's shaped, where the current top income tax of 37% is near its apex.
Let me tell you about progressive taxation, my friend, and I'll give you my perspective.
I'm actually somewhat in favor of progressive tax system to a certain degree, but let me put it like this.
I work 16-hour days and a little bit on the weekends.
I worked this Sunday on a variety of creative projects.
So I work quite a bit.
I also have to travel on weekends, so it's rough.
When I work these double shifts, the amount of revenue I generate isn't exponential.
It's actually a diminishing return.
Meaning, the more I work, the less per hour I make.
Unfortunately, for me, the more I work, the less per hour I make and the greater it's taxed.
If I were to work only eight hour days and just cut my workload down, produce substantially less, I would keep a larger percentage of the money that I do make.
I would have more free time and I'd still be rich.
Yet for some reason, because of this system, for some reason we have this system, if I work eight hours, let's say I make 100% revenue, I work an additional eight hours.
I'm only going to generate 60% of what I'd make, but I'm going to owe a greater amount of taxes because now I'm making a higher, I'm in a higher tax bracket.
So that extra 60% will be taxed at 37 as opposed to the other, the first 100%, which is going to be taxed at like 25.
So I'm paying more in taxes, making less, make it make sense.
Yogi, house of Yogi on X, he's got the post.
Unrealized tax gains for Gen Z.
I do have some corrections for him, but let me explain it.
You buy a Pokemon card for 50 bucks.
Somebody offers you 500 for it and you say, no, you love the card.
You're keeping it.
The government says, hey, that's a $500 card now.
You owe us $100 in taxes.
But you go, I didn't sell it.
Say, we don't care.
That's a wealth tax.
You have an unrealized gain.
That card is worth money.
You don't have $100 lying around.
So you're forced to sell the card you love just to pay the tax and the money you never received.
Next month, the card drops back to 50.
Your card is gone.
Your money is gone.
And the government shrugs.
Well, here's the reality.
In this scenario, you still made $350.
You spent $50 on the card.
Its value increased by $450.
You sold it for $500,000, minus your 50 costs, you're at 450 profit.
You gave the government $100,000 taxes.
You cashed out $350 and you say, well, I guess I made money.
Here's the thing.
Next month, the card goes to $5,000.
You go, oh, I knew it.
That's why I bought it.
I knew it was going to go up to 5K.
And you only made $350,000 because they forced you to sell it.
Now that other guy's got it, just made a cool $4,000 on it.
And he's laughing, being like, hey, whatever.
Next month, it's $500,000.
And you're sitting there being like, I was smart.
I invested early.
And now it's all gone.
Let's read more and we'll put it into context.
That's a wealth tax on unrealized gains.
Now picture this.
Your mom calls you crying.
She has to sell the house she raised you in, not because she can't afford it.
She's lived there for 30 years.
It's paid off.
The government says she owes $15,000 she doesn't have because the property value went up.
So she sells your home, the kitchen where she made you breakfast, the doorframe where she marked your height, it's gone to pay a tax on money that was never real.
So what happens is this four-bedroom house that she bought for $100,000 all those years ago, indeed they did, paid off, paying her taxes, but this is property taxes now.
This currently exists.
This does happen now.
Now the house is worth a million dollars 40 years later, and this happens to a lot of families.
And they say, we've reassessed your home and now you owe us 10 grand in taxes.
And she goes, I don't make that much.
It's not my fault the gentrification happened.
Then sell it.
So she does.
And she makes money.
She does.
But you lose your home.
And then she has to move into a smaller home because comparable houses are all still a million dollars.
And she can't afford the taxes on a million dollar home.
So she made a profit.
She buys a smaller house in a worse off place.
And that's the cycle.
Your dad put everything into his business.
For 20 years, he built it from nothing.
One year, his business is valued at $2 million on paper.
He owes a massive tax bill on that gain.
So he empties his savings, sells his truck, borrows money to pay it.
Next year, the market crashes, his business is worth $200,000.
He lost everything.
But I'm going to give it to you in a better way.
He's still cashed out, right?
Sure.
Your dad starts a business.
Blood, sweat, and tears.
Sleepless nights, 16-hour days.
After 20 years, it's now a $10 million business.
And he's like, I knew it.
He's only making $100,000 a year.
They're bringing a lot of revenue.
They have a couple locations, but he's getting it.
The government says the value of your company is now $10 million.
So you owe us $500,000.
He goes, oh.
So he goes to an investor and says, I can't cover the tax bill on this.
It's eating into our revenues.
And like it's thin margins as it is, I need someone to buy into the company.
So he sells a percentage of the business, pays the taxes.
Next year, same thing happens.
So he sells a percentage of the business.
Next year, same thing happens.
Five years later, as the company grows and the tax bill grows, he only owes a tiny portion of it now.
His total net worth has actually diminished over time.
The business that he built, he no longer owns for the most part.
People are voting against him.
And he says, man, I just wanted to make something that I could own and break that barrier and be rich.
Capitalism, right?
Government said no.
The difference is that without this tax, 30 years later, he owns 100% of a business and he sells it for $50 million.
And he pays $15 to $17 million in taxes on that sale, puts a cool $30 million in his pocket and says, kids, we're going on vacation.
And when I die, I have an inheritance for you.
With the wealth tax, he's shaving away at his business, selling it off, desperate to pay the bills he can't pay.
Now, when the businesses ultimately go down, does he get his money back?
Does he get his truck back?
Does he get the government care?
Of course not.
So let's apply this to say Jeff Bezos.
I'm no fan of Jeff Bezos.
You know, it is what it is.
They say, you owe us on the $100 billion in stock.
And he goes, I don't have that money.
Well, if you can't pay it, then you're screwed.
So what does he do?
He says, okay, I'm going to sell off my stock to pay it.
Well, he owes 5%, so he's got to liquidate $50 million.
The sale sparks a drop in the stock price.
Now he's not worth $100 billion anymore.
Now he's worth $70 billion.
Lost $30 billion to pay $50 million.
Government says we don't care.
So his net worth drops.
This is the point.
And a lot of people are saying, yeah, but Tim, why do I care about a billionaire?
Because the stock isn't just held by the billionaire.
It's held by 401ks and retirees.
It's held by working class individuals who are trying to put their money somewhere that it could grow.
Amazon seemed like a good bet, but because of the wealth tax, the market collapses.
This is the short-term thinking of the left.
And that's why even Mark Zuckerberg becomes the latest to leave.
Congratulations.
The revenues are going to decrease.
Total revenue maximizing top rate of 39%.
Any top rate above 41% reduces revenue because people leave.
They stop spending.
It's like the sales tax thing I was telling you about.
Debate heats up over California wealth tax as more billionaires are eyeing the exit sign.
Washington Democrats are considering a retreat.
This is as of today.
On the estate tax, fearing a wealth exodus.
No, please.
I beg of these Democrat states, please, please implement these taxes.
You've got to tax the rich.
You have to.
You know why?
Because then these millionaires, these billionaires are going to be like, I'm voting Republican.
The Israel thing was really funny, right?
These Democrat billionaires are like, we're voting Democrat, and we're going to give them tons of money.
And the Democrats went nuts, propped up all this wokeness, and then what happened?
Yeah, you get what you get, don't you?
You end up with a bunch of anti-Israel politicians at the highest level, and these pro-Israel billionaires were like, oops, but now they're supporting the Republicans.
And I don't really care about Israel.
I care about the Democrats' whack-aloon policies and taxes being stopped.
And if these billionaires finally wake up and decide to leave, then good, so be it.
So when these states tell these billionaires we're going to tax you, and then Zuckerberg moves to Florida, well, guess what?
The Florida government's going to say to Zuckerberg, we want you to run your business a specific way.
It's called laws.
I'm not saying the government can go there and be like, you're conservatives now.
They're going to say, hey, we have laws in this state, right?
And if you're running your business, you got to run it the way we expect it to be run.
Well, Zuckerberg is going to support the people who don't take his money from him.
So by all means, Democrats, keep playing this game and see what happens.
From Cal Matters.
California is still in the red with another big budget deficit projected for next year.
I'd like to give a golf clap to our Democrat friends.
Let me tell you how California works.
I lived in California for quite a bit, and I worked on the homeless issues out there.
And there was this interesting problem where no matter how much money they pumped into it, it didn't change.
No matter how much money they spent on the homeless crisis, no matter how many homeless shelters, homelessness just got worse and worse and worse.
You know why?
No one actually cared.
It was all short-term thinking.
They never actually wanted to address the real cause of homelessness, which is mental illness.
And to be honest, the weather.
Instead, they said, look, I'm running for reelection.
And these people are complaining about homelessness.
What am I going to tell them?
Sorry, guys.
There's no way to pay to make the problem go away.
And the nice weather attracts homeless people.
I got an answer for you.
You could tell them the truth.
The only way to remove the homeless is by force.
We're going to forcefully detain them and bring them to a facility.
And that may be the only way you do it.
There's a proposal in Northern California.
They would put any homeless person under a conservatorship and take any income they would generate, saying, if you can't manage your life, we'll manage it for you.
And there are challenges there because it means the government could just decide to take someone's assets from them if they deem them homeless.
How do you do it?
Edudication, I suppose?
What do you think the people of California do when they hear that proposal?
No, that's so wrong and mean.
Okay, well, then you get homeless.
See, these liberals are short-term thinkers.
You got Skid Row.
They won't solve the problem.
They don't care.
They only need to sound good on paper.
So the politician says, vote for me and I'll finally put a stop to this homeless problem by building houses.
They go, yay.
Now what happens?
Well, you can't just put a homeless person in a house.
Why, you ask?
There's a reason why they're homeless.
And it's not because they fell in hard times.
It's because of substance abuse issues and choice.
So if a person can't do the basic things to maintain their own life, how will they maintain a home?
You see, many of these liberals don't own homes.
So they're like, landlords are evil and they don't understand.
It is a, I'm not going to swear, it is difficult to be a landlord.
Seriously.
I'm not saying landlords have it the hardest in the world, but oh boy.
I've rented property in the past, short term, and decided I am never doing this again.
You get a call one day.
Fridge is broken.
Okay, well, what happened?
I don't know.
What are you going to do about it?
Well, the truth is the tenant probably broke the refrigerator and now you got to buy a new one.
That's your problem.
AC isn't working.
What happened?
I don't know.
It's not working.
Okay, well, the reality is they probably broke the AC and you got to fix it.
Oh, the stove won't turn on.
What happened?
Doesn't matter.
You are renting it out.
And the people who are living there could be good or bad tenants.
And they can cause damage to your property.
And then you have to pay for it.
Now, security deposits exist.
Sure.
They're hard to claim.
It is not the easiest thing in the world to just be a landlord.
And often you're not really making that much money.
I rented a property out.
I made a couple hundred bucks a month.
And it wasn't because I wanted to be a landlord.
It's because I owned the property and we were trying to sell it and we couldn't.
So I said, let's just rent it out.
And we did.
And we made a couple hundred bucks.
Awesome, you say.
Well, Tim, you should be lucky.
You were doing no work and you were making money off money.
Except the cost of maintaining the property was more than I actually made in rent.
And I owned it outright.
So I was like, this is pointless.
And you can't charge.
That's pointless.
Shut her down.
So I just sold it.
Cashed out a decent profit from the original price.
Largely, you know, I made some money.
So it worked out.
But this is what these liberals don't understand.
So you end up with a country, a state like California.
Their budget is in crisis.
They have a homelessness and drug problem.
Bubonic plague.
You know, I'm pulling this up.
I'm doing it.
I'm doing it.
Bubonic plague, California.
I bet you.
Oh, my God.
I should just do this story all the time.
What?
I can't.
This was like 2018.
I did this video.
August of 2025.
What to know about plague after a new case in California?
You know what?
I should just do a whole segment on plague popping up in California again.
Seriously.
It's the disease.
It's the crisis.
Maybe voter ID can save these people.
I don't know.
What I think is this.
There was a report that I saw that said Republicans have a Latino voter problem because of ICE.
You know what that means?
It means that there are Latino voters that care more about their illegal immigrant friends and family members than this country.
And that is the cascade failure.
You bring in an illegal immigrant, then you give forgiveness.
They get naturalized.
Their friends and family are non-citizens and they will vote on their behest.
That means every time you do this, you are eroding the borders of your nation.
So in California, voter ID could change the game because it makes ballot harvesting much more difficult.
And voting should be hard.
Now, the theory is this.
California is five years ahead of the rest of the country.
If that's the case, I hope you're ready to get cooked.
But I would be remiss if I did not at least present this from Business Insider.
I'm a millionaire living in California.
I'm happy to pay higher taxes since I have more wealth.
It just makes sense.
With all due respect to this guy, Scott Ellis, how much do you want to bet he's got his money in some kind of tax loophole?
Or let's just say this.
I don't like the phrase loophole when people are paying taxes the way they were told to pay taxes.
Loophole implies they were told to do something and they found a way not to.
How much do you want to bet this guy has a wealth manager who makes sure that he pays the least amount of taxes possible?
Yeah, I'd be willing to bet.
He says, I love it here.
Nothing to do with taxes.
Taxes are the price I pay to live in a civil society.
You know why that offends me?
Because California is the homeless capital of the developed world, and they're not taking your tax money to fix it.
They're just living like fat pigs off your tax money.
The price I pay is the bribe?
The corruption?
Oh, sure.
When the cop pulls you over and you go, the bribe I give you is the price I pay to live here.
Not in California, but in certain countries, right?
That's what he's saying.
Your tax money is going for corruption.
It's not solving the problems, but that's the price you pay.