The Hardest Part About Being a Billionaire in California: Proving You Left

Billionaire | California | Taxes | Residency | February 25, 2026

This Week's Quote:

“You can’t have a million dollar dream with a minimum wage work ethic.”
     ―Zig Ziglar

A proposed billionaire tax has some of the richest Californians eyeing the exits. First they’ll have to contend with the state’s dogged tax collectors.

California has one of the nation’s highest personal income-tax rates on high earners. It’s also home to officials who pore through phone logs, look for country-club memberships and even double-check visits to the dentist—all to figure out what really functions as home.

This can be a tricky question. The superwealthy might have a house in the Bay Area or the Hollywood Hills, but also spend time in a Paris apartment, a Florida compound or a yacht off the coast of Greece. 

Also, California has few hard-and-fast rules on residency. Tax advisers say you’re generally considered a resident if California is your “domicile”—a true home base to which you plan to return. A person domiciled in California who spends time elsewhere is sometimes still expected to pay state income taxes. 

“If you leave, you really have to leave,” said Steven Toscher, managing principal of Hochman Salkin Toscher Perez, a Beverly Hills law firm that advises clients on navigating California residency.

Advisers generally recommend that people who want to avoid California’s tax net limit their visits and keep clear records of their purpose and duration. 

Some advisers also suggest leaving breadcrumbs, such as adding a “we’ve moved” note with your new address to Christmas cards, telling your house of worship in a letter you’ve found a spiritual home elsewhere, and making and keeping appointments with out-of-state doctors, accountants and veterinarians.

Learning what it might take to truly depart sometimes proves too much. 

“You’re a member of the L.A. County Club? Not anymore, you’re not,” said Alan Witlen, a partner in the private client and tax practice at Withers in Los Angeles. “That’s where a lot of these conversations break down. People realize they don’t want to give up these things they love.”

The state relies heavily on high earners. In 2023, more than one-sixth of its personal income tax revenue came from the top 0.1% of earners, or about 17,500 filers. 

Consciously uncoupling from California has become a hot topic thanks to a proposed, one-time, 5% tax on billionaires’ assets.

That prospect has unsettled California billionaires, in part because it would apply to those who were residents as of Jan. 1. The focus on taxing assets—a far bigger financial hit than a higher income tax—has drawn particular alarm.

With its Silicon Valley and entertainment fortunes, California has more billionaires than any other state, according to Altrata, a wealth-intelligence firm. Its estimates are based on business addresses, and not all of these people would necessarily count as residents.

In a private Signal chat, dozens of Silicon Valley billionaires and other tech elites criticized the proposal and shared alternatives. In the final hours of 2025, a few worked to put daylight between themselves and California. 

Peter Thiel’s private investment firm Thiel Capital, which is largely based in Los Angeles, said it signed a lease for office space in Miami. And a spokeswoman for David Sacks, the Trump administration’s crypto and AI czar and a longtime San Francisco resident, said he has been a Texas resident since December. 

The “select few billionaires” looking to leave will eventually have to answer to California tax officials, said Suzanne Jimenez, chief of staff of the healthcare workers union behind the proposal.

“A billionaire temporarily relocating to their fourth or fifth mansion in another state does not officially mean they avoid paying a fair share to help keep emergency rooms and hospitals open,” Jimenez said. 

The Franchise Tax Board, the state agency that collects personal income tax, says it doesn’t track what share of its residency audits are for higher earners. 

The process for determining whether a taxpayer truly moved away stems from a complex and long-running tax case involving Stephen Bragg, a California crane operator who moved to Arizona to become a cattle rancher. 

Bragg worked 70 to 90 hours a week on his Arizona ranch, but also had a wife and children in California, as well as bank accounts, registered vehicles and business interests in Arizona and Texas, according to a state board’s decision on the case. The board concluded Bragg had been an Arizona resident in 1993, and listed 19 factors that officials continue to consult when determining residency.

They include where your businesses, spouse and children are based; how many days you spend in California and why; where your credit card transactions originate; where you’re registered to drive and vote; and where you’ve joined membership organizations like country clubs and gyms. 

If someone stops paying California taxes and gets flagged for an audit, the burden is generally on them to prove they left when they claimed.

“There is no gaming the Franchise Tax Board,” said Jenny Hill Bratt, a partner in Sheppard Mullin’s San Diego private clients and tax practice.  

Last year, California’s Office of Tax Appeals upheld a finding that comedian Russell Peters owed more than $2.1 million in back taxes for 2012 to 2014, when he had filed as a nonresident or part-year resident.

The tax appeals office reviewed, in part, auditors’ “reconstruction of his physical presence” using his credit card data and found Peters spent far more days in California in 2012, 2013 and 2014 than in Nevada.

The tax appeals office also looked at a child custody case with Peters’s ex-wife to glean details on their “family abode.” It found Peters’s physical presence and familial abode “more strongly” indicated his domicile was in California and that his physical presence and property “heavily support California residency.” 

BYLD partner Peter Smiley, a lawyer for Peters, said his client “relies entirely on the advice of others” to navigate tax law. “Mr. Peters always understood that he had paid the taxes he owed,” Smiley said.

Credit goes to Laura J. Nelson, Wall Street Journal, January 24, 2026.

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This Week’s Author, Mark Bradstreet