California is heading toward a November ballot vote on a one-time 5% wealth tax targeting residents worth more than $1 billion, even as IRS data show the state is already losing taxpayers and income at significant scale. Los Angeles County alone recorded a net outflow of 17,496 tax filers who took nearly $1.9 billion in income with them. Investor Mark Cuban has warned that if the measure passes, it would change where he routes startup capital, a claim that complicates the revenue case supporters are making.
The outflow before the vote
The IRS data, compiled from federal tax returns, show the losses extend well beyond Los Angeles. Orange County recorded a net loss of 11,618 filers. San Diego County shed 9,401, Riverside County 8,968, and San Bernardino County 8,462. The income those filers carried out of California bears directly on tax collections that fund schools, public safety, and infrastructure.
The ballot initiative at the center of this debate was backed by the Service Employees International Union and has qualified for the November ballot. It would impose a one-time 5% levy on anyone with a net worth above $1 billion. The measure would apply retroactively to Californians who held state residency as of January 1, 2026.
Cuban, who said the measure would have no direct effect on his own finances because he is not a California resident, argued the real risk is investment routing. He wrote that if the measure passes, he would ask any multibillion-dollar startup he is considering investing in to move out of California first. He added that in his view, only "idiot startup founders" would stay in the state if the measure becomes law.
The counterargument
Democratic Representative Ro Khanna has defended the proposed tax, and supporters argue it would generate billions of dollars for healthcare and education. The counterargument is real: outflows from California predate this ballot initiative by years, and the IRS data do not establish that the specific threshold this measure sets would meaningfully accelerate a trend already in motion. The revenue case is not obviously wrong on its own terms.
On balance, what the data resolve is direction, not elasticity. Los Angeles County was already losing nearly 17,500 filers before this measure reached the ballot. What the existing numbers cannot answer is whether the tax would change the investment decisions of people who never appear in California residency figures at all. That is the read-through Cuban is offering, and it is the one the November vote cannot test in advance.