The move has some financial advisors and their clients asking: Could this wealth tax, if it passes, be just the beginning? Could California’ s Billionaire Tax Act be copied in other states?

The array of possible strategies to soak the rich is virtually limitless. Other states have already imposed very high tax rates on high-income people. Massachusetts was able to raise significant revenue by taxing incomes over $ 1 million at 9 %, a measure approved by the voters. California already imposes hefty taxes on seven-figure incomes— as do New York, Oregon, Maryland and New Jersey. But taxes on wealth itself, not just income, represent uncharted territory in America. Many question their legality, and California’ s proposal is likely to get tested in federal court.

Some of the proposals even involve lowering the threshold on a wealth tax to include a much larger cohort of affluent individuals— people with a net worth in the $ 50 million to $ 100 million range. That would ensnare some of the wealthiest clients of financial advisors, when wealth levels have soared in the last 15 years.

Ultra-wealthy clients are“ very concerned,” says Justyn Volesko, co-head of Cerity Partners Family Office in New York.“ As the act currently stands, it is very far-reaching.”

Many of his ultra-wealthy clients in California considered moving away, he says, but they ultimately decided it was“ too difficult and not worth the lifestyle change.”

It may already be too late to avoid the billionaire tax by simply moving out of California. The initiative would retroactively apply to billionaires who were its residents on January 1, 2026.( Opponents say that this time line will never survive a court challenge; the proposed law was introduced only last October, leaving too little time for the state’ s estimated 200 to 250 billionaires to uproot.)

To pass, the proposal must first get roughly 875,000 signatures from registered California voters before June 24, 2026, just to get on the November 3, 2026, ballot; then it needs a majority of votes to become law. As a direct-to-voters ballot initiative, it cannot be vetoed by Gavin Newsom, the state’ s Democratic governor, who opposes it. Though the measure aims to add some $ 100 billion to state coffers, Newsom has publicly said that he’ s concerned about the exodus of the wealthiest Californians, as the state has more billionaires than any other. The bill, he has said, could actually harm state coffers and stifle innovation.

Proponents say the tax is necessary to offset federal cuts to California’ s public education, food assistance and Medicaid programs.

Though the tax would apply to worldwide assets, including shares of public and private companies and alternative assets such as precious metals and artwork, it would exclude real estate and many retirement accounts.“ Many wealthy clients should be aware that not all assets are subject to this tax,” says Richard Pon, a CPA and certified financial planner in San Francisco.

Other advisors doubt the wealth tax will pass.“ While it is hard to predict what will pass under the state legislature, this is not the first time legislation for a wealth tax has been proposed in California,” says Robin Petty, a managing director and head of wealth strategy at NewEdge Wealth in Philadelphia. Previous attempts never gained a sufficient foothold, she says.

Considering the current opposition from giants of both political parties— the measure has been decried by, for example, PayPal co-founder David Sacks, a venture capitalist appointed by the Trump administration to oversee crypto and AI policy, and tech entrepreneur Chris Larsen, who was a big donor to Kamala Harris’ s presidential bid— not to mention Gov. Newsom’ s strong crusade against the measure, Petty says she gives the initiative a“ less than 50 % chance of passing.”

Still, some affluent Americans view the proposal as a national test case for taxing wealth. Other states are already looking to impose something similar to make up for revenue lost to federal tax cuts under the One Big Beautiful Bill Act.

“ Clients are understandably concerned that if California successfully defends a retroactive residency trigger in court, it could normalize the concept and provide a constitutional road map for other high-tax states,” says Denise Lee, senior wealth advisor at Perigon Wealth Management in Irvine, Calif.

— Ben Mattlin

JANUARY / FEBRUARY 2026 | FINANCIAL ADVISOR MAGAZINE | 11