Billionaire Peter Thiel has donated $3 million to help fight a proposed wealth tax in California that targets the state’s ultra-rich.
The money went to the California Business Roundtable, a group pushing back against what it sees as anti-business policies, including the controversial 2026 Billionaire Tax Act, according to Fox Business.
Gov. Gavin Newsom, a Democrat, has also come out against the proposed tax.
Details of the Billionaire Tax Act
The measure, if it makes it onto the ballot and passes, would impose a one-time tax of up to 5% on individuals and trusts with over $1 billion in certain assets.
It would apply retroactively to California residents as of Jan. 1, 2026, with the tax due in 2027 and the option to spread payments over five years.
Covered assets include businesses, stocks, intellectual property, and collectibles, but exclude real estate, pensions, and some retirement accounts.
Supporters of the proposal say the revenue, estimated at up to $100 billion over five years, would go toward healthcare, food assistance, and education.
But opponents warn it could backfire and push billionaires and tech founders out of the state.
Newsom Voices Concern
Gov. Gavin Newsom is not backing the tax. In a recent interview with Politico, he said, “The evidence is in. The impacts are very real—not just substantive economic impacts in terms of the revenue, but start-ups, the indirect impacts of… people questioning long-term commitments, medium-term commitments.”
Newsom added, “That’s not what we need right now, at a time of so much uncertainty. Quite the contrary.”
Newsom also said the proposed measure “makes no sense” and is “really damaging to the state.”
Billionaires and Founders Push Back
Some billionaires have already made moves. Public filings show that business entities linked to Google co-founder Larry Page left California in December.
Page also purchased two properties in Miami worth over $73 million.
Oracle Chairman Larry Ellison reportedly sold his San Francisco mansion for $45 million, while Thiel and Google co-founder Sergey Brin have also shifted operations out of state.
Tech founders are speaking out, too. Palmer Luckey, co-founder of defense tech company Anduril, posted on X that the tax could force entrepreneurs to sell stakes in their companies just to cover the bill.
“One market correction, nationalization event, or prohibition of divestiture (not at all uncommon during wartime) and I am screwed for life,” Luckey wrote.
Dylan Field, co-founder of design software company Figma, warned that founders could be hit with a “double tax event” if they’re forced to pay capital gains taxes on top of the wealth tax, according to Fortune.
He also said the tax could force early-stage companies into “down rounds” that lower their valuations and scare off talent and investors.
Support From Labor and Lawmakers
Despite the pushback, the measure has support from the Service Employees International Union-United Healthcare Workers West and some Democratic lawmakers.
Rep. Ro Khanna (D-CA), who represents part of Silicon Valley, has supported the tax as a matter of fairness.
“We believe billionaires can pay a modest wealth tax so working-class Californians have Medicaid,” he posted on X.
Arguments for the Tax
Business columnist Michael Hiltzik from the Los Angeles Times argues the tax is a reasonable response to increasing inequality and the recent federal tax breaks passed under President Trump.
“It’s gaining nationwide attention because California has more billionaires than any other state,” he wrote.
Economist Gabriel Zucman also believes the tax could be harder to avoid than critics claim.
He said that “it has become impossible to avoid the tax by leaving the state,” adding that it applies to global assets and is based on residency as of Jan. 1.
The tax’s backers say it would only impact about 200 of the state’s wealthiest households and is a way to recover funds lost due to recent federal budget cuts, particularly to Medi-Cal.
California expects to lose about $19 billion a year for Medi-Cal alone.
Ballot Fight Still Ahead
While the fight is heating up, the proposal hasn’t made it onto the ballot yet.
Organizers have until June 24 to collect nearly 875,000 signatures to qualify.
Thiel’s donation may be a preview of the high-stakes battle ahead.
Billionaires and venture capitalists are likely to continue pouring money into the opposition, while supporters argue the measure is a long-overdue correction.
Whether voters will ultimately back it remains to be seen, but the lines are clearly being drawn, and the money is already flowing.