California’s Franchise Tax Board Prepares for Unprecedented Billionaire Residency Audits
California’s Franchise Tax Board is preparing to enforce Proposition 40, a one-time 5% wealth tax on billionaires, if voters approve it on November 3. The agency faces the unprecedented challenge of valuing global assets and determining residency for ultra-wealthy individuals who are actively relocating to avoid the levy. While supporters view the tax as essential to offset federal healthcare cuts, opponents and labor unions warn it will drive capital out of state and could inadvertently tax middle-class assets. The measure’s implementation is complicated by legal challenges, residency disputes, and the agency’s lack of experience with wealth taxation.