5 minEconomy
California Billionaire Tax Drives 23-Year-Old Founder to Cancel San Francisco Move
Emil Barr, a 23-year-old millionaire, canceled his planned move to San Francisco over California's proposed billionaire wealth tax, even though he wouldn't owe it. The measure, Proposition 40, would impose a one-time 5% tax on billionaires to fund healthcare, and the debate over its economic impact has national stakes.
Emil Barr, a 23-year-old entrepreneur who has already built a million-dollar business in Columbus, Ohio, canceled his plan to move to San Francisco after examining California's regulatory and tax climate, including a proposed billionaire wealth tax that he would not currently owe. Barr, founder of the workforce technology company Flashpass, told Fortune he signed a lease about a year ago to relocate to the city, drawn by its concentration of investors and artificial intelligence companies. He changed his mind after concluding that California's political rhetoric is hostile to entrepreneurs.
«I think it was less of a matter of immediate finances,» Barr said, pointing instead to what he described as the state's «anti-entrepreneurial» tone. He said he is not certain he will remain in Ohio to build his business, but he is certain he would not build a business in California. Barr warned that if entrepreneurs continue to be villainized, they will not only leave California but the country. His company still has employees and investors in the state, and he continues to travel there. He said he is open to paying higher taxes if the tax code is updated in a more nuanced, progressive way, though he declined to offer specifics.
The measure at the center of the debate, Proposition 40, will appear on the Nov. 3 ballot. It would impose a one-time 5% tax on qualifying billionaires who were California residents on Jan. 1, 2026. The tax would apply to accumulated wealth rather than annual income, with most revenue directed to healthcare. The nonpartisan Legislative Analyst's Office estimates it would raise tens of billions of dollars over several years, while also expecting taxpayer responses, including some departures, that could reduce ongoing income-tax revenue by less than $1 billion annually.
Supporters argue the tax is needed to replace roughly $100 billion in federal healthcare funding that California is projected to lose over five years. Six Nobel Prize-winning economists, including Joseph Stiglitz, Paul Krugman, and Daron Acemoglu, signed a September letter arguing the tax would be modest compared with billionaires' wealth gains and would support public services important to the state's economic growth. Debru Carthan, vice president of SEIU-United Healthcare Workers West, the union backing the measure, rejected concerns that it would drive away wealthy residents or investment. «This scare tactic just doesn't stand up to scrutiny,» she said, adding that more money and investors are coming into California now, not less. She pointed to Massachusetts and Washington, where taxes on wealthy residents have raised billions while high-income populations have continued to grow, though those policies differ from California's proposed one-time wealth tax. She warned that without additional funding, clinics would close, hospitals would lay off workers, and Californians could lose coverage or face higher premiums.
Opposition to the measure includes Gov. Gavin Newsom and Google cofounder Sergey Brin, who has helped fund the campaign against it. Not all billionaires see the proposal as a reason to avoid California. Nvidia CEO Jensen Huang said in a January Bloomberg podcast that he was «perfectly fine» with the proposed tax, citing Silicon Valley's talent pool as the reason the company operates there.
The dispute carries national implications because states invest in public services that help businesses grow, but can lose the chance to tax that wealth when residents move before cashing out. Billionaire departures attract attention, but wealth can leave in quieter ways. Founders like Barr can choose where to build before their fortunes are large enough to tax, and residents who already hold such wealth can relocate before realizing their gains. Cornell sociologist Cristobal Young, who has spent nearly two decades studying how taxes affect migration among high earners, has found that such moves are often less responsive to tax rates than political rhetoric suggests, though the debate over Proposition 40 continues to test that research against the decisions of individual entrepreneurs.
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