Sergey Brin and Larry Page, who launched Google from a Stanford University dorm and led Silicon Valley's heyday, have finished preparing to leave California.
The fact that iconic figures who nurtured this region for decades and held the line are turning their backs carries weighty implications. The immediate trigger is the introduction of a "Wealth Tax." But beneath that lies deep distrust that says, "We pay some of the highest taxes in the United States, but the public services we get in return are terrible." The prevailing view is that California has fallen from being a "good state worth the high cost" in terms of housing prices and taxes to an "expensive but insecure state."
According to a compilation of foreign media reports on the 12th (local time) by Fox Business and the New York Times (NYT), Brin closed or moved 15 limited liability companies (LLCs) he held in California just before Christmas last year. Seven of the 15 transferred their base to Nevada, which borders California. Among them was a company that manages the equity of Brin's personally owned superyacht and private jet terminal. Larry Page, who co-founded Google with Brin, also distanced himself from California by purchasing a $71.9 million (about 105 billion won) home in Miami, Florida, early this month.
California's most prominent tycoons, including Brin and Page, are strongly pushing back against a statewide wealth tax ballot initiative. The wealth tax is not yet an enacted tax. It is a ballot initiative led by a health care workers' union. The state government expects to secure about $100 billion (about 146 trillion won) in tax revenue by imposing a one-time 5% tax on the asset of residents with a net worth of $1 billion or more.
This measure will be imposed on all high-asset Californians who were residents as of Jan. 1 of this year, if it passes a statewide vote in Nov. with a majority. The pool of those subject to the tax is about 200 people, including Brin and Page. As a result, among high-asset individuals, the perception has spread that "regardless of whether it passes, crossing the reference date creates a tax risk."
The asset valuation method has also stirred controversy. Though not yet law, the measure would tax not only income but the entire range of asset that can be monetized, such as stocks, unrealized gains, and intellectual property. In the United States, it is common to levy taxes that carve out portions of specific assets, such as property taxes or estate taxes. According to Thomson Reuters, there is no precedent at the state level for a "net worth tax" that lumps an individual's entire net worth together and separately collects 5%, as the California initiative proposes. For high-asset individuals, uncertainty about the policy precedent outweighs the rate itself. The assessment is that fear that an improper precedent could enable additional tax hikes at any time has driven them to the exits.
The dissatisfaction is not just about the size of the bill. High-asset individuals and corporations take the issue of "mismatch between taxes and outcomes" seriously. California's top state income tax rate is 13.3%, the highest among the 50 states. Compared with Texas and Florida (0%), which have no state income tax at all, the annual difference in tax burden runs into the millions of dollars for the same high earners. Even compared with Hawaii (11.0%) or New York state (10.9%, excluding New York City's separate tax), which follow California, the rate is more than 2 to 3 percentage points higher.
Even so, perceived evaluations of public services are at rock bottom. In particular, worsening public safety has become a symbolic grievance for the wealthy. About 30% of America's homeless population resides in California. The rates of car theft, store looting, and street crime in major cities such as San Francisco and Los Angeles all exceed the national average. Even in upscale residential areas once considered "safe zones," exposure to crime continues. According to Beverly Hills police statistics, residential break-ins, theft, and vehicle theft are consistently recorded in that area as well. In San Francisco's upscale Union Square district, even large department stores have switched to reservation-only operations due to theft concerns.
By contrast, Texas and Florida, which do not levy any state income tax, maintain mid-tier or better standings on public safety and urban management indicators. Corporations and tycoons ask, "How does it make sense that we pay taxes at a record high while safety is something individuals must handle by separately hiring private security?" Complaints are mounting that it has become difficult to recommend the area as a residence for employees' families. The core issue is not the act of paying more tax than in other states, but that it is impossible to know where the vast sums are spent and what outcomes they produce.
California still has attractive elements that other regions cannot offer. Its unmatched talent pool and mature innovation ecosystem, mild climate, and relaxed lifestyle are irreplaceable strengths. Nvidia CEO Jensen Huang is a representative figure staying in California. In a recent Bloomberg interview, he said, "We chose to live in Silicon Valley, and we will follow whatever taxes are applied," signaling acceptance of the state government's policies.
But cases like Jensen Huang are few. Most high-asset individuals have begun to question whether California's strengths are strong enough to offset the tax burden and day-to-day insecurity. Venture investor Chamath Palihapitiya said in a Fox Business interview, "$1 trillion (about 1,460 trillion won) in asset has already left California," and warned, "At this rate, the middle class will be left holding that tax bill." Real estate magnate John Sobrato also urged policy changes, saying, "California is already losing a lot of talent and capital due to failed tax policy."