California voters are set to decide whether to slap a new tax on the state's billionaires as IRS data show thousands of taxpayers, and billions of dollars in income, are already flowing out of the Golden State.
The outflow is adding fuel to the debate over California's proposed billionaire tax, with Mark Cuban warning Saturday the measure could drive not only wealthy residents but investment and startups out of the state.
Cuban's warning came amid a heated back-and-forth with Democratic Rep. Ro Khanna, who has defended the proposed tax. The billionaire investor threatened to steer future investments away from California if the measure moves forward.
The clash comes as California is already experiencing significant taxpayer outflows, according to the latest IRS data compiled from federal tax returns.
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Los Angeles County, home to Hollywood and one of the nation's largest economic engines, led the nation in taxpayer losses, with a net 17,496 tax filers leaving for other states. Those departing taxpayers took nearly $1.9 billion in income with them.
Other California counties also saw significant outflows. Orange County recorded a net loss of 11,618 tax filers, followed by San Diego County with 9,401, Riverside County with 8,968 and San Bernardino County with 8,462.
The movement of taxpayers and their income can affect state and local tax collections that help fund schools, public safety and infrastructure.
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Against that backdrop, California's proposed billionaire tax has become a flashpoint in the debate over whether the state's tax policies could push more wealth and investment elsewhere.
The proposed ballot initiative, backed by the Service Employees International Union, would impose a one-time 5% wealth tax on Californians with a net worth exceeding $1 billion.
The measure, which has qualified for the November ballot, would apply retroactively to Californians who were residents as of Jan. 1, 2026.
Supporters argue the tax would generate billions of dollars for healthcare and education, while critics warn it could drive wealth and investment out of California.
Cuban has gone further, arguing the measure could influence not only where billionaires live, but where investors put their money and startups do business.
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"If this passes, and it doesn't directly impact me at all, I won't be a Cali resident, but you can bet if I'm investing in a multi billion dollar startup, I'm asking them to move from California first," Cuban wrote.
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He went even further, adding, "IMO, if this passes, only idiot startup founders stay in Cali."