American Summer at Citywealth: California dreaming – wealth at scale and Proposition 40
California has the largest economy of any US state and is one of the world’s great centres of private wealth creation. This November, voters will decide whether some of the largest fortunes it has produced should face a one-off ‘billionaire’ wealth tax says Karen Jones, founder of Citywealth, who has more than 20 years’ experience in global private wealth.
See the Top 75 list of advisors and managers in California 2026
Proposition 40 has turned the taxation of billionaires into a much wider argument about California’s economic model. The California Democratic Party supports the measure while Democratic Governor Gavin Newsom opposes it. Organised labour and healthcare groups are divided, while some of Silicon Valley’s best-known billionaires are vocally opposed to it.
The argument is particularly Californian. From the Gold Rush to Hollywood, Napa and Silicon Valley, the state has repeatedly created new industries and new fortunes. Even the San Francisco 49ers take their name from the prospectors who arrived in 1849. Today’s rush is for artificial intelligence, intellectual property and equity in fast-growing companies.
Guilhem Savry, Head of Strategy Research in Edmond de Rothschild’s Global Investment Research team, says the scale of the current AI investment cycle is difficult to overstate. “Microsoft, Amazon, Meta, Alphabet and Oracle are expected to deploy several trillion dollars in AI-related capital expenditure between 2026 and 2030. In practical terms, that means vast investment in the infrastructure needed to develop and run AI, from data centres and advanced chips to servers and networking. The sums involved are large enough that the financing of the AI build-out is beginning to reshape parts of the US corporate bond market, as even some of the world’s largest technology companies turn to debt alongside their enormous cash flows to fund investment.”
The question in 2026 is what happens when that wealth reaches billion-dollar scale.
Taxing scale
On 3 November, Californians will vote on Proposition 40, a proposed one-off tax on residents who had more than $1 billion in covered net assets on 1 January 2026. The proposal would levy a tax of up to 5%, with 90% of the proceeds directed to healthcare and the remainder to food assistance or education-related programmes.
But what constitutes wealth is particularly important in a state built on entrepreneurship. Businesses, securities, art, collectibles and intellectual property fall within the assets covered by the proposal. Real property, along with certain pensions and retirement accounts, is generally excluded. That means an entrepreneur’s multibillion-dollar interest in the company they founded could be caught while an extraordinarily valuable California property generally would not be.
The distinction is particularly relevant in Silicon Valley, where much of a founder’s wealth can consist of equity in a business rather than cash. Venture capital allows companies to raise and share risk while founders and employees retain interests whose value can rise sharply before a sale or other liquidity event.
Opponents argue that taxing that value creates difficult questions around valuation and liquidity, particularly for private businesses. Supporters counter that someone who owns assets worth billions is extraordinarily wealthy whether or not those assets have yet been sold. The politics are unusually divided. California’s Democratic Party supports Proposition 40 while Democratic Governor Gavin Newsom opposes it. Unions and healthcare organisations have also split over the proposal.
SEIU-United Healthcare Workers West (represent 120,000 healthcare workers), Teamsters California (representing 250,000 workers across the state) and the California Nurses Association support it (they represent more than 100,000 registered nurses in 200 hospitals), while the California Teachers Association, California Medical Association and Planned Parenthood Affiliates of California oppose it. (They represent 100 individual physical health center locations with nearly 1 million low income, public program patients a year). Planned Parenthood’s objection: They see it as a temporary, one-off revenue stream that would not provide the stable, predictable, long-term funding healthcare providers need.
The Financial Times reported on 16 August that Google co-founder Sergey Brin’s contributions to Building a Better California, a group opposing Proposition 40 and supporting rival ballot measures, had exceeded $100 million. The FT also reported almost $40 million in new contributions from Californian billionaires to the wider effort, including an additional $10 million from Ripple executive chair Chris Larsen (who has experienced extensive litigation from the SEC – now resolved – for its distribution of their XRP crypto coin) and $7.5 million from venture capitalist John Doerr. See full list of donations here.
For the private wealth industry, however, the more immediate question is what clients are actually doing.
Olivier de Givenchy, CEO of the West Region at J.P. Morgan Private Bank, says families are taking a considered approach rather than responding to tax policy alone. “While some are exploring new locations in response to changing tax environments or personal circumstances, others remain deeply committed to their communities,” he says. “Family priorities, business interests and quality of life all play a role.”
That more nuanced picture is also reflected in the experience of California’s trusts and estates advisers.
“California remains one of the world’s premier centers for wealth creation, even as some families reconsider residency because of tax and regulatory considerations,” says Abby Feinman, Head of the Los Angeles Trusts and Estates practice of law firm Katten. “The state’s unique combination of technology, venture capital, sports and entertainment, life sciences and real estate continues to generate significant new wealth and attract entrepreneurs from around the globe.” However she adds. “Proposition 40 has generated a lot of discussions. My clients are moving forward with planning and transactions that the family has been contemplating for some time, independent of the potential wealth tax. We are also rethinking wealth planning and structuring on a go forward basis to maintain flexibility and to anticipate future proposed legislation.”
David R. Fullmer, an immigration partner at Wolfsdorf Rosenthal LLP based in Woodland Hills, California, where he represents corporate clients, entrepreneurs and high-net-worth individuals in a broad range of US immigration matters, sees another part of California’s wealth-creation cycle among Silicon Valley’s technology workforce. “Many of the clients I work with come to the US from India for postgraduate education before taking jobs at major technology companies.” Through salaries, restricted stock units and investment, he says such households can accumulate net worth of $2 million to $3 million by their mid-30s and more than $5 million by their mid-40s, with some going on to found companies and achieve profitable exits. It is wealth at a very different scale from the billionaires targeted by Proposition 40, but illustrates the pipeline beneath them: Fullmer says, “It is international talent arriving for education and opportunity, building wealth through California’s technology economy and, in some cases, becoming founders themselves.”
Christina Cacchio, a partner at Withers who works across its Los Angeles and Texas offices and advises clients relocating between the two states, sees the issue from both sides of the California-Texas divide. “We continue to see significant domestic migration from high-tax states to states with low or no individual income tax,” she says. “The movement of residents from California to Texas remains a meaningful and sustained trend, with activity continuing throughout 2026.”
Cacchio says the California Billionaires’ Tax Act’s placement on the November ballot “has renewed interest among ultra-high-net-worth individuals in relocating to jurisdictions perceived as offering a more favorable tax environment and less punitive wealth taxation.”
She also sees a broader shift than personal domicile alone. “As a result, we continue to see a growing number of individuals and business owners relocating not only their personal residences but also their business operations from California to states such as Texas. In many cases, businesses are establishing or expanding secondary operations in Texas to facilitate the migration of employees, management teams, and key business functions to a more favorable operating environment.”
If founders move do employees follow?
California-to-Texas migration predates Proposition 40, so the ballot measure cannot account for the trend on its own. But Cacchio’s comments raise a more significant question than whether an individual billionaire changes residence: whether businesses, employees and management functions follow.
Ivan Illán, AIF, CFS, founder and chief investment officer of global investment management firm AWAIM, says families at the highest levels of wealth often act before the effects of a proposed policy become clear.
“When policies such as the proposed California wealth tax or increased regulatory friction emerge, UHNW families rarely wait to see how enforcement unfolds. While middle-tier wealth may attempt to restructure locally, truly high-net-worth capital is highly mobile. We consistently see families proactively relocating their tax residency and asset bases to jurisdictions such as Texas, Florida, Nevada, and established trust hubs like South Dakota and Delaware.
“For international and multi-jurisdictional families, the concern extends beyond the direct tax impact. Equally important is the broader precedent of heightened regulatory scrutiny and uncertainty. As state-level policies continue to diverge, wealth planning has shifted from a largely federal focus to a more tactical approach centred on state residency and asset-protection strategies.”
“Even within my own family and business, we expanded our asset-management services from our Los Angeles headquarters to include Hong Kong last year. My family resides in Hong Kong as I support our firm’s continued expansion. This was not only a strong growth move for the business, but it also placed us in a significantly more favourable tax environment.”
Relocating overseas, however, has different implications from moving between US states—particularly for US citizens who remain subject to federal taxation.
Joshua Rubenstein, global chair of Private Wealth at Katten Muchin Rosenman in New York, says: “For United States citizens, moving overseas does not do much to mitigate tax burdens, as unless you expatriate, you are still subject to US taxes, and you are now subject to someone else’s taxes as well. Of course, if you are fed up with the United States, it does solve that issue.”
“But changing states has become increasingly common, especially as some states contemplate adding wealth taxes and other tax burdens. There are a handful of states that have no state-level income tax, such as Florida and Texas, so they have become popular destinations. Of course, you have to sever your tax ties with your prior state successfully, which is not always easy if you retain a residence there.”
“States such as Delaware, New Hampshire, South Dakota, Nevada, Wyoming and Alaska, in addition to having low tax burdens, have favourable trust legislation. But as things change ever more rapidly and unpredictably, what families want most is flexibility in their planning, so they can toggle from Plan A to Plan B to Plan C as tax and litigation risks, which are high on everyone’s minds, evolve.” As to what those risks are Rubenstein says. “The primary litigation risks are posed by beneficiaries who are unhappy with their comparative treatment and are already so wealthy that they can afford to air the family’s dirty laundry to prove a point.”
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The result is not one simple story of wealthy residents leaving California. Families have a spectrum of options, from changing state residence or trust jurisdiction to moving business functions internationally. Yet mobility is only one side of California’s wealth story: the state continues to produce fortunes rooted in businesses, intellectual property, land and cultural assets. Also incredible stories of philanthropy. See Citywealth’s recent article on the rise of domestic US trusts.
California’s stars: From Star Wars to a philanthropic museum
George Lucas provides a particularly literal example of California’s ability to turn an idea into a valuable asset. Star Wars became films, intellectual property and ultimately Lucasfilm, which Disney acquired in 2012 for approximately $4.05 billion. Roughly half of the consideration was paid in cash and half in Disney shares at closing. Lucas therefore exchanged part of his concentrated ownership in Lucasfilm for an interest in the much larger Disney business as well as cash.
This September, another chapter opens. The Lucas Museum of Narrative Art which is reported to cost $1bn to build with ongoing costs at $.5bn was funded and co-founded by Lucas and Mellody Hobson. It is due to open in Los Angeles on 22 September. Its permanent collection contains more than 40,000 works. Despite Lucas’s association with Star Wars, the collection is much broader than film memorabilia. Its subject is narrative art: visual art that tells stories.
The collection stretches across painting, illustration, murals, photography, comics, children’s books, science-fiction illustration, movie posters and cinematic material. It provides a current example of a first-generation entertainment fortune moving into philanthropy and cultural legacy.
California’s stars: From mining to 83,000 acres
California’s great fortunes have not always begun with code or intellectual property. At San Simeon on the Central Coast, approximately 83,000 acres of Hearst Ranch stretch across 18 miles of coastline. It remains a working cattle ranch. Zebras descended from animals once kept in William Randolph Hearst’s private zoo also roam the property.
The origins of the family’s California landholdings lie in an earlier wealth boom. George Hearst made his fortune through mining and began acquiring land at San Simeon in 1865. His son, William Randolph Hearst, built a newspaper and media empire and developed Hearst Castle above the ranch.
The Hearst Corporation considered development proposals for the ranch over several decades. It ultimately entered into a conservation arrangement that protects the landscape in perpetuity while allowing the cattle operation to continue. It is a practical example of the problem behind the phrase “succession planning”: how to preserve a large, illiquid asset across generations while continuing to operate it commercially and preventing fragmentation or development.
It also provides a useful counterpoint to Proposition 40. Private-company interests, securities and intellectual property can fall within the proposed tax, while real property is generally excluded. See also the Tejon Ranch as another substantial property in California. It is the largest expanse of private land in California – a working ranch, raising cattle and crops.
California’s stars: Napa: from Paris to Scarecrow
California’s wine industry provides another strand of the state’s wealth history, combining valuable land, private businesses, luxury brands and multigenerational ownership. The 1976 ‘Bottle Shock’ Judgment of Paris famously pitted Californian wines against some of France’s finest in a blind tasting. California won both the red and white categories, overturning assumptions about where the world’s greatest wines could be made.
Robert Mondavi and Baron Philippe de Rothschild of Château Mouton Rothschild created Opus One, bringing together one of Napa’s defining entrepreneurs and one of Bordeaux’s great wine dynasties. Within a few years of the Judgment of Paris, one of Napa’s defining entrepreneurs and one of Bordeaux’s great wine dynasties were in business together.
A smaller Rutherford vineyard offers a more private-client version of the story. J.J. Cohn, a senior MGM figure involved in films including The Wizard of Oz, bought land in Napa in the 1940s and planted Cabernet Sauvignon. He had no intention of becoming a winemaker. Instead, his grapes found their way into some of Napa’s most celebrated wines, including Opus One. Cohn kept his original vines on St George rootstock when many Napa vineyards moved to AXR-1. When phylloxera later forced widespread replanting, some of Cohn’s 1945 Cabernet vines survived. Known as the “Old Men”, they are among Napa’s oldest Cabernet plantings.
After Cohn died in 1996, his heirs faced a dispute over the property. His grandson, photographer Bret Lopez, wanted to retain part of the vineyard but could not afford to buy out his two sisters. In 2002 he joined with neighbouring vintner and filmmaker Francis Ford Coppola to acquire the estate. Lopez retained part of the vineyard, including some of the old vines, and created his own wine. He called it Scarecrow.
This means: Hollywood earnings bought the land; the vineyard supplied grapes to some of Napa’s leading wines; an inheritance dispute forced a decision over ownership; and another filmmaker provided the capital that allowed Lopez to retain part of the family property. The wine that followed took its name from the film world that had created the original family wealth.
When first-generation wealth becomes family wealth
Feinman’s clients illustrate what happens as first-generation fortunes become family wealth. “Today, many California-based families are increasingly mobile, with residences, business interests and family members spread across multiple states and countries. As a result, private wealth planning has become less about a single jurisdiction and more about coordinating tax, trust, governance and succession strategies across multiple jurisdictions. There is a meaningful focus on protecting assets, preserving privacy and preparing the next generation for leadership and stewardship roles.”
She adds: “As part of the focus on family governance, preparing future generations to manage wealth responsibly and maintaining a shared vision across a geographically dispersed family, we are also seeing a great number of our clients formalizing their family office structures and utilizing private trust companies.”
The structures themselves are not unique to California. Citywealth’s recent examination of US domestic trust jurisdictions found similar demand for structures that allow families to combine long-term fiduciary oversight with greater involvement in operating businesses, ranches, concentrated investments and other assets.
The California examples make the underlying assets less abstract: vineyards, ranches, art, intellectual property, founder shares and operating businesses. The structures may be familiar; the size, concentration and variety of the assets are what make the planning more complicated.
The California question
California’s wealth story is not simply that it has rich residents. It has repeatedly developed industries capable of producing very large fortunes: mining, film and media, wine, property, technology and now artificial intelligence. Sport has become another valuable asset class, while the 49ers still carry the Gold Rush in their name.
That history helps explain why Proposition 40 has become more than a technical tax proposal. It lands in a state whose economic identity is closely tied to entrepreneurship, ownership and the ability to turn new ideas into valuable businesses.
The November vote will not settle the wider competition between California and lower-tax states such as Texas. Nor does the evidence yet show that a proposed tax has emptied California of its wealthy residents. Feinman still describes it as “one of the world’s premier centers for wealth creation”, while Cacchio is seeing meaningful movement in the opposite direction.
What Proposition 40 does is bring those two realities together. California is still creating wealth on a scale few places can match. Voters are now being asked how much of that accumulated wealth the state should claim, and some of the people who created it are spending money to get their political opposition heard.
Key Takeaways
- California voters will decide on Proposition 40, a one-off wealth tax targeted at billionaires with over $1 billion in assets.
- The proposed tax of up to 5% aims to fund healthcare and education, raising questions about asset valuation and liquidity.
- Prominent figures from California’s tech industry oppose the tax, while the public remains divided on its potential economic impacts.
- California’s wealth generation spans industries, from tech to entertainment, creating substantial fortunes and influencing migration trends.
- The outcome of Proposition 40 could shape California’s economic identity and its competition with lower-tax states like Texas.
Karen Jones is the founder of Citywealth and a wealth management commentator with more than 20 years’ experience across global private wealth, family offices and succession. Before founding Citywealth in 2005, she held commercial roles at The Times and The Sunday Times, London; Legal Business magazine and worked on the Asia Pacific Legal 500, launching related awards.
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