Alex Spiro Warns CA Governor of Wealth Tax Exodus

Attorney Alex Spiro has sent a formal letter to California Governor Gavin Newsom regarding a proposed wealth tax. The letter warns that several of Spiro's clients will 'permanently relocate' if the measure becomes law.

The proposed Billionaire Tax Act would impose a one-time 5% levy on assets exceeding $1 billion. Spiro argues the tax is unconstitutional and would cause significant economic damage to the state. He claims the measure would trigger an exodus of capital and innovation, forcing clients to sell assets to pay the tax.

Governor Newsom has stated he opposes the tax but lacks the authority to veto a ballot initiative. The proposal requires signatures to appear on the November 2026 ballot.

The proposed measure targets California residents with assets exceeding $1 billion. If the proposal receives enough signatures, it will appear on the state ballot in November 2026. If passed, the tax would apply retroactively to all California residents as of January 1, 2026.

The tax proposes a one-time 5% levy on the value of assets. This includes illiquid assets that generate no income. Spiro's letter describes this as a 'taking without just compensation.' The measure aims to address a general revenue problem by concentrating the burden on a small group of citizens.

While the tax targets the ultra-wealthy, the implications extend to the broader economy. Spiro argues that the state would exchange a one-time windfall for the permanent loss of billions in annual tax revenue.

In his letter, Alex Spiro outlines three primary legal objections to the Billionaire Tax Act.

Unconstitutional Confiscation

Spiro argues the Act is unconstitutional because it constitutes an uncompensated confiscation of property. He cites the Supreme Court case Armstrong v. United States, noting the government cannot force 'some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.'

Retroactive Application

The letter highlights the retroactive nature of the tax. It would apply to individuals who relocate from California in 2026 before the November election. Spiro cites United States v. Carlton, arguing that retroactive taxation cannot be 'harsh and oppressive.' A 5% levy on former residents who departed before the law was enacted meets that definition.

Lack of Historical Precedent

Spiro notes that California has never imposed a wealth tax, particularly one targeting former residents. He references Blodgett v. Holden and Biden v. Nebraska, arguing the Supreme Court closely scrutinizes unprecedented exercises of government power.

Spiro warns of severe economic consequences if the tax is implemented. He states the Act will trigger an exodus of capital and innovation from California.

According to the letter, Spiro's clients have made it clear they will permanently relocate. The letter also references other wealthy Californians, including venture capitalist Peter Thiel and Google cofounder Larry Page, who have considered shrinking their presence in the state. Billionaire Palmer Luckey also voiced opposition on X, stating he would have to come up with 'billions of dollars in cash.'

The economic risks cited include:

• Permanent loss of income, capital gains, and property taxes.
• Loss of businesses, jobs, and charitable giving.
• Forced asset sales that could depress values and trigger market instability.

Spiro concludes that his clients prefer to remain in California but will not stay if subjected to an 'unconstitutional confiscation of their wealth.'

Attorney Alex Spiro has previously represented high-profile billionaires and celebrities, including Kim Kardashian, Jay-Z, and Elon Musk. While he did not name the specific clients referenced in the letter, he represents 'California residents who would be subject to the proposed Billionaire Tax Act.'

Governor Gavin Newsom has previously stated he is against the tax and would 'fight' it. However, if the measure passes as a ballot initiative, the Governor does not have the ability to veto it.

Spiro's letter serves as a warning of potential litigation. He states his clients are prepared to mount a vigorous constitutional challenge if the measure advances, which would be 'protracted and expensive.' He urges the Governor to discourage signature gathering and campaign against passage to avoid years of contentious litigation.