In a move that has sent shockwaves through the tech and investment world, David Sacks, the prominent Silicon Valley billionaire and co-founder of venture capital firm Craft Ventures, has officially planted his flag in Texas. His recent announcement isn’t just a simple business expansion—it’s a direct and public rebuke of his home state’s latest fiscal policy, a proposed 5% wealth tax that many see as a final straw.
“I’m pleased to end the year by announcing that Craft Ventures has opened an Austin office. God bless Texas and happy new year!” Sacks declared on social media . This isn’t merely a relocation; it’s a powerful statement from one of the industry’s most influential voices, joining a chorus of tech elites warning of a mass talent and capital flight from California. The California billionaire exodus is no longer a theory—it’s a full-blown reality with significant economic implications.
Table of Contents
- A Final Straw: California’s Proposed 5% Wealth Tax
- David Sacks and the Strategic Move to Austin
- The Greater Exodus: Silicon Valley’s Finest Fleeing
- An Economic Time Bomb: Chamath’s $500 Billion Warning
- Why Texas? The Land of Opportunity for the Ultra-Wealthy
- Conclusion: California at a Fiscal Crossroads
- Sources
A Final Straw: California’s Proposed 5% Wealth Tax
Dubbed the ‘2026 Billionaire Tax Act,’ the proposed initiative aims to close a massive state budget deficit by levying a one-time 5% tax on the net worth of any California resident with assets exceeding $1 billion . Backed by the Service Employees International Union, the plan is projected to generate an enormous windfall—potentially up to $100 billion—to fund state healthcare and other public services .
However, the tax’s structure is its most contentious feature. It’s not an annual levy on income or a small slice of assets; it’s a sweeping assessment on total net worth, including the often illiquid and volatile value of private company stock. For many tech founders and investors, their wealth is tied up in their companies, whose valuations can swing wildly. Forcing them to pay a massive tax bill based on a peak valuation, only to see that value plummet, could be financially catastrophic.
David Sacks and the Strategic Move to Austin
David Sacks, a PayPal mafia alumnus and former COO of PayPal, is no stranger to building and evaluating high-stakes ventures. His firm, Craft Ventures, co-founded in 2017 with Bill Lee, has a significant portfolio of tech companies . For Sacks, the decision to establish a major new office in Austin is both personal and professional.
While he hasn’t explicitly named the wealth tax as his sole reason for the move in his public statement, the timing is impossible to ignore. His simple yet pointed social media post, “God bless Texas,” stands in stark contrast to the increasingly hostile business climate in California. This strategic pivot allows Craft Ventures to maintain its Silicon Valley roots in San Francisco while firmly establishing a presence in a state with no state income tax, lower operational costs, and a business-friendly regulatory environment . It’s a masterclass in hedging one’s bets in an uncertain political landscape.
The Greater Exodus: Silicon Valley’s Finest Fleeing
Sacks is far from alone. Reports are swirling that other tech titans are making similar plans. Google co-founder Larry Page and iconoclast investor Peter Thiel are among those reportedly “planning to leave California before year-end” specifically due to fears over the wealth tax .
California is home to 214 billionaires, the highest concentration of any state in the nation, with the vast majority being tech moguls . This mass of concentrated wealth makes the state a prime target for such a tax, but it also makes it incredibly vulnerable to a capital flight. The list of potential exiles isn’t just a few names; it represents a potential brain drain and a massive shift in the center of gravity for American innovation.
An Economic Time Bomb: Chamath’s $500 Billion Warning
Perhaps the most vocal and articulate critic of the tax is billionaire investor and Social Capital CEO, Chamath Palihapitiya. He has issued stark warnings on social media, predicting that the policy will trigger “an exodus of the state’s most talented entrepreneurs who can and will choose to build their companies elsewhere” .
Palihapitiya didn’t just offer a vague warning; he provided a chilling hypothetical. He outlined a scenario where a founder with a $1.2 billion net worth would owe a $60 million tax bill. If their company’s valuation then dropped by 60%, their net worth would collapse to $480 million, but their tax bill would remain a crushing $60 million—a debt that could force them into bankruptcy . He has gone so far as to estimate a potential $500 billion net worth exodus from the state, a figure that would devastate California’s long-term tax base and economic future, ironically worsening the very budget deficit the tax was meant to solve .
Why Texas? The Land of Opportunity for the Ultra-Wealthy
So, why Austin? The answer is a combination of factors that create a powerful magnet for the disillusioned California elite:
- No State Income Tax: Texas is one of only a few states with no personal income tax, a massive financial incentive for high earners.
- Lower Cost of Living: While Austin’s costs have risen, they are still significantly lower than in San Francisco or Los Angeles, especially for housing and commercial real estate.
- Business-Friendly Climate: Texas has a reputation for streamlined regulations and a government that actively courts business investment.
- Echoes of Silicon Valley: Austin has spent years cultivating its own tech scene, dubbed “Silicon Hills,” offering a familiar ecosystem for transplanted entrepreneurs and venture capitalists [[INTERNAL_LINK:austin-tech-boom]].
This perfect storm of advantages makes Texas, and Austin in particular, the logical new home for those seeking to preserve their wealth and build their businesses without the perceived overreach of California’s tax policy.
Conclusion: California at a Fiscal Crossroads
The California billionaire exodus led by figures like David Sacks is a pivotal moment for the Golden State. The proposed 5% wealth tax represents a high-risk gamble: a short-term financial windfall versus the long-term economic health of the state. While the goal of funding public services is noble, the method appears to be driving its most successful and innovative residents into the welcoming arms of Texas. As more billionaires make their move, California’s government must ask itself whether it is solving a budget crisis or creating a much larger economic one. The answer to that question will shape the state’s destiny for decades to come.
Sources
[1] David Sacks’ official announcement on social media, as reported by multiple news outlets.
[14] California Legislative Analyst’s Office (ballot summary).
[21] Various news reports on billionaire relocations (e.g., Times of India, Fox Business).
[23] Times of India article on the billionaire exodus.
[24] Reuters reporting on the potential revenue from the tax.
[26] San Francisco Chronicle analysis of the Forbes billionaire list.
[28] Chamath Palihipitiya’s post on X (formerly Twitter).
[32] CNBC profile and reporting on Chamath Palihapitiya’s warnings.
[5] Official Craft Ventures press release and business news coverage (e.g., Business Wire).