The Residency Date Was Set Ten Months Before the Vote

On November 3, California voters will decide Proposition 40, a one-time 5% tax on the net-worth of residents worth more than $1 billion. The measure uses January 1, 2026 as a snapshot date: anyone who was a California resident that day would owe the tax if it passes. That date falls 10 months before anyone casts a ballot. Nothing is filed or registered on it. It is the day on which each person's residence would later be tested.

A scenario I walk clients through: a founder closes the sale of his company in November and learns that the tax rules affecting him are tied to a date in January.

His residency paperwork is in order. His cash is not, because most of the proceeds sit in escrow for another 18 months. What decides his outcome is how he would fund a tax bill in a jurisdiction where he holds no liquid assets.

As written, the tax follows residency on that date, so a move completed afterwards does not remove the liability. Bloomberg reporting carried by the New York Post in January said that at least six billionaires had cut ties with California, and a tax adviser told Bloomberg he had personally helped four of them end their California residency before the cutoff.

Three well-known moves fell in the same weeks: Larry Page reportedly bought about $173 million of Miami waterfront property in December. Peter Thiel's firm opened a Miami office on December 31, and he registered to vote in Florida. David Sacks moved to Austin that month, and his firm opened an office there on the same day. The report includes no statement from them about their reasons.

A date is not a destination

The variable that matters in a case like this is the date written into a proposal. At that point the measure had not yet qualified for the ballot, and nobody could say whether it would ever become law.

People are entitled to arrange where they live around the rules in front of them, so the more important question is what such an arrangement rests on.

Residency for tax purposes is also a set of facts: where a person lives, works, owns property and votes. The reporting on the December moves reads like a list of exactly those facts, a property, an office and a voter registration.

Why this keeps happening

Proposals set their dates early and then families have to act on the proposal because the date arrives before the law does. Then the uncertainty compounds.

California's ballot carries two competing measures, Propositions 41 and 42, and only one of the three can prevail. If either of the others gets more yes votes than Prop 40, the billionaire tax does not take effect even when Prop 40 itself passes.

Recent polling shows slim majorities for all three at once. Spending reflects the stakes: roughly $31 million on the supporting side against more than $187 million from the opposition group.

The blind spot is rarely the move, it is the liquidity

A net-worth tax differs from an income tax in one aspect that matters here: it charges value whether or not that value is liquid. For a founder whose wealth sits in company shares, a charge of 5% of net worth raises a cash question before it raises a tax question. What is sold, borrowed against or distributed to pay it?

That question applies to any family and in any jurisdiction. A change of address leaves it exactly where it was.

The Conclusion

We take no position on whether Proposition 40 should pass. The structural question is the same either way.

A move made under a proposal is a bet on its outcome, and here the outcome has three branches: the tax passes and takes effect, the tax fails or the tax passes and is displaced by a competing measure with more yes votes. A plan is sound when it holds on every branch: a residency supported by facts a tax authority can verify, liquidity to meet a net-worth charge without selling the core asset and no single jurisdiction carrying the whole structure.

Henley & Partners' Private Wealth Migration Report 2026 describes wealthy families increasingly acting like portfolio managers, building an architecture across several jurisdictions instead of choosing one country. The California ballot shows the practical reason for it.

If you'd like a review of your own setup, reach out and we'll set up a call.