“Good riddance.” That was the response from one California commentator when several billionaires announced plans to leave the Golden State late last year to avoid a proposed “billionaire tax.” The ballot measure, which voters could be asked to approve this fall, would impose a one-time 5 percent tax, payable over five years, on all California residents with a net worth exceeding $1 billion and who resided in the state as of January 1, 2026.

When reports emerged in December 2025 that venture capitalist Peter Thiel and Google co-founder Larry Page were preparing to relocate to avoid the tax, San Francisco Bay Area Representative Ro Khanna joked that he would “miss them very much.” Others insisted that even if a few billionaires departed, the tax would still deliver a windfall for the state.

They may want to reconsider. A recent study led by Stanford economists for the Hoover Institution finds that the measure will collect significantly less revenue than its supporters promised. Worse, the permanent loss of future income-tax payments from departing billionaires could end up costing California far more than the wealth tax ever collects.

That poses a problem for the proposal’s backers, including the Service Employees International Union–United Healthcare Workers West, which is sponsoring the initiative. In support of the tax, they point to an expert report by pro-wealth tax economists, who estimated it would raise $100 billion.

The measure’s proponents acknowledge the risk of capital flight. Their revenue projections assume what they call a “relatively small avoidance rate” of about 10 percent, reflecting the possibility that some billionaires might leave to escape the tax. Starting with an estimated $2.2 trillion in wealth held by California billionaires, as measured by the Forbes billionaire list, and adjusting for that avoidance assumption, they arrive at a $100 billion revenue estimate.

But as the Stanford study shows, that assumption is already obsolete. By January 1, just six publicly confirmed departures—Thiel, Page, Google co-founder Sergey Brin, film producer Steven Spielberg, financier Don Hankey, and venture capitalist David Sacks—removed an estimated $536 billion in wealth from California’s tax base. In other words, about a quarter of the act’s wealth-tax base has already vanished before the initiative had even qualified for the ballot.

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