One Comment About Taxation – Capital Outflows From California and New York Are Not Coming To Canada

 

Walter Wriston, the former Citicorp CEO, once observed that “capital goes where it’s welcome and stays where it’s well treated.” The line has become tax-policy wallpaper. It is, nevertheless, the most useful sentence in English for thinking about what is unfolding in certain left-leaning jurisdictions around the world including certain states south of the border.

 

In late April, the SEIU United Healthcare Workers West announced it had collected approximately 1.5 million signatures supporting the 2026 Billionaire Tax Act, a California ballot initiative imposing a one-time 5% tax on the net worth of Californians with net worth of $1 billion or more. That is nearly double the 875,000 required to qualify for the November 2026 ballot, and early polling suggests it has a real chance of passing.

 

The mechanics are aggressive. The Act uses two separate snapshot dates: residency is fixed as of January 1, 2026 (the “tax obligation date”), while net worth is measured as of December 31, 2026 (the “valuation date”). The tax is then payable on April 15, 2027 in up to five annual installments, with a 7.5% non-deductible “deferral charge” on any unpaid balance. Net worth would use voting-rights values for closely held shares – a methodology the US Tax Foundation has shown would overvalue founder stakes and could force the wealthiest Californians to dump enormous blocks of shares to fund the bill. The drafters anchored residency to January 1, 2026 to forestall an exodus – a provision unlikely to survive review.

 

The behavioral response is already well underway. Google co-founders Larry Page and Sergey Brin and Oracle founder Larry Ellison have all reportedly taken steps to leave California or have already left. A recent analysis by the California Tax Foundation estimates those three relocations alone took roughly 38% of California’s billionaire wealth out the door – and the state stands to lose as much as $4.5 billion annually in other tax revenue, quickly offsetting any one-time haul. Even Democratic Governor Gavin Newsom is opposed.

 

This is not California’s mistake alone. In New York City, newly elected socialist Mayor Zohran Mamdani is pushing the Fair Share Act – a two-percentage-point increase on the city’s personal income tax for earnings over $1 million. Combined with state rates, the top combined rate would approach 17%, the highest in the U.S. New York Governor Kathy Hochul has so far refused the required cooperation. Mamdani’s threatened fallback is a 9.5% across-the-board property tax increase – which would fall hardest on those least able to bear it.

 

At the U.S. federal level, Senator Elizabeth Warren reintroduced her Ultra-Millionaire Tax Act of 2026 in late March: a 2% annual wealth tax on net worth over $50 million, a 1% surtax on billionaires, and a 40% “exit tax” on anyone above the threshold who renounces U.S. citizenship. The bill is unlikely to pass the current Congress, but the political signal is unmistakable.

 

The international comparison cuts the other way. Australia spent two years pursuing “Division 296” – a proposal to tax unrealized gains on superannuation balances over $3 million – before the Albanese government walked it back in October 2025 after significant political damage. In February 2026, the Netherlands passed in its lower house its own 36% tax on actual returns – including unrealized gains on stocks, bonds, and crypto – for 2028 implementation. Shortly after, the Dutch Finance Minister conceded the bill “cannot proceed as it is” after the Senate signalled some objections. Two of the few major economies to have actually tested unrealized-gains taxation are now walking it back.

 

The U.S. is our most important economic mirror, and tax developments there shape the competitiveness of our regime whether many Canadians want to acknowledge it or not. We have lived through a version of this already: the 2024 federal capital gains inclusion-rate increase was structured around a poorly designed $250,000 annual threshold that would not be subject to the increase – a “targeting” mechanism designed to insulate “ordinary taxpayers” while extracting more from the so-called wealthy. The proposal was eventually abandoned, but the underlying mindset – that affluent Canadians can be asked to “contribute a little more” without behavioral consequence – remains.

 

The empirical record is plain. The wealthy do, in fact, move if they feel their capital would be treated better elsewhere. IRS migration data analyzed by California’s Legislative Analyst’s Office shows net domestic outmigration of roughly 200,000 taxpayers from California in 2023, with the heaviest losses in upper-income brackets. Washington State’s experience is even cleaner: Jeff Bezos relocated to Florida shortly after the 2022 capital gains tax took effect and, as the Tax Foundation documented, saved approximately $1.1 billion on a single year of Amazon stock sales. France’s two-decade experiment with its wealth tax produced enough capital flight that even President Macron abolished it in 2018.

 

My own practice has seen departure files involving successful Canadians climb dramatically over the past decade – not in fanfare, but file by file. Public statistics are too blunt to capture the quiet exodus, which is why I routinely invite Doubting Thomases – including a Liberal MP last week – to visit my office and see the work my colleagues and I are doing, confidentially of course.

 

The California initiative may yet pass or be struck down. The Mamdani proposal may yet be enacted. The Warren bill almost certainly will not. None of that is the point. Capital has already begun to move – and once it moves, it does not come back.

 

This should matter more to Canada than to anyone. Our productivity has flatlined for over a decade, our per-capita GDP is falling, and our top marginal personal tax rates exceed those in every U.S. state. The capital fleeing California and New York is not headed for Toronto or Calgary – it is headed for Florida, Texas, Tennessee, and other welcoming jurisdictions both within the U.S. and around the world.

 

Wriston’s line was not a slogan. It was a description of behavior. Canada has spent a decade telling capital it is unwelcome.

 

Capital is listening.

 

One Comment About Leadership – The Refusal to Look

 

Last week I was in a conversation about the significant amount of wealth quietly leaving Canada. A sitting MP who was part of the conversation disputed the premise and reached for the familiar counter – look at how many people are coming into Canada. I pointed out that headcount in is not the same as capital out; they measure different things. So, I offered him something better than debate: come to my office, I said. I’ll open the window on the files I’m working on right now. Names redacted, confidentiality preserved. See it for yourself.

 

He wasn’t interested. I followed up. Nothing.

 

This isn’t the first time I’ve extended that kind of invitation to someone whose public position depends on a particular version of the facts. It almost never gets picked up. And that, I think, is the more interesting story than any single policy disagreement.

 

Real leadership requires a willingness to have your priors disturbed. Not performatively – actually. When somebody opens a window onto evidence you don’t currently have, the leader’s instinct should be to look through it. You’re not committing to anything by looking. You’re not surrendering your judgement. You’re just gathering information you didn’t have a minute ago. The talking-points instinct is to turn away, because looking creates risk: what if the view doesn’t match the script?

 

Genuine open-mindedness is uncomfortable. It means accepting that your current position might survive contact with new information or it might not – and being okay with either outcome. It means treating an offered window as a gift, not a threat.

 

The leaders I’ve respected most over the last thirty plus years all share one trait: they got curious before they got defensive. The ones I’ve watched falter did the opposite.

 

If somebody offers you a window, look through it. You might see something that changes your mind. Worst case, you confirm what you already believed – but now you’ve actually earned it.

 

One Comment About Economics / Politics  – If Alberta Separates, What Are Some of the Economic and Tax Considerations?

 

To be clear, I am not in favor of Alberta separation. I’m a proud Canadian who studied Canadian history extensively during my undergraduate years and have continued to do so ever since. Having said that, I consider myself part of a large – but often silent – group that is frustrated by how poorly Alberta and Albertans are sometimes misunderstood and treated.

 

Given that polling support for Alberta separation is now in the high 20% range, this is clearly not a movement comprised solely of cranks and extremists. Accordingly, I got thinking about what some of the practical issues would be – especially from a tax and economic perspective – if Alberta were to proceed down a separation path.

 

I mused about those issues in a recent article posted on my blog site, which you can read here.

 

Let me know your thoughts.

 

Oh Canada.

 

Bonus Comment – From John Maynard Keynes – Famous English Economist – About Not Being Married to Your Position

 

“When my information changes, I alter my conclusions. What do you do, sir?”

 

Totally agree. Leaders, what do you do in that situation?

 

I hope today’s newsletter has been thought-provoking for you.

 

As many of you know, I’m passionate about helping people make better decisions – whether in tax, leadership, or business. If you’d like to go deeper on those topics, my recently released book, Making Life Less Taxing (Version 2), is now available and expands on many of the practical ideas I’ve written about over the years.

 

I’m also putting the finishing touches on my next book, Leadership Compounds: How Small Decisions Build Culture, Credibility, and Legacy. It explores a simple but powerful idea: leadership isn’t about grand gestures – it’s about the small, consistent decisions that compound over time.

 

For those interested in a more hands-on approach, I’ll soon be announcing a bespoke consulting initiative – The Acorn Growth Program – designed to help leaders and organizations grow intentionally, one small (but important) decision at a time. Feel free to reach out to me directly for more information.

 

And if you’re not already on my mailing list, feel free to sign up for my In the Mood Network newsletters to receive more content. No fluff – just practical insights on tax, leadership, and economic policy.

 

Thanks for reading. As always, I welcome your thoughts and feedback.

 

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