Nothing brings tech titans together like taxes.
This week, as the specter of a California “#billionaire #tax” ballot initiative gained momentum,
the moguls grew furious.
The outrage reached a fever pitch on X,
where the following scenarios were predicted, should the initiative be approved in November:
🔸The next great tech company will be built in China,
🔸Anduril founder Palmer Luckey could be “screwed for life,”
🔸and (should you believe “All-In” host David Friedberg)
California will slide into “the darkest of human fantasy
— socialism.”
♦️But what does the proposal actually say? Who would have to pay up? Is it time to start addressing your neighbors as “comrade”?
Here’s a cheat sheet to cut through the panic.
♦️What is this tax measure?
The Billionaire Tax Act is a ballot initiative aimed for the November election that would create a one-time
5% tax on California residents with a net worth of more than $1 billion
— that’s about 200 people.
They could choose to pay the bill all at once
or spread the payments over five years. (Installment payments would accrue interest.)
Should the measure pass, the tax is projected to raise roughly $100 billion,
which would be placed into a special fund.
Of that, 90% would go toward state-funded healthcare services;
the legislation says this is necessary to offset recent Republican budget cuts to Medicare.
The remaining funds would go for food assistance and education programs.
♦️Whoa, is this thing for real?
Hold your horses. We’ve got a long way to go:
The initiative was submitted in October, but it will need to earn 874,641 signatures
— about 4% of registered voters in California
— to qualify for the November ballot.
If it appears on the ballot, it will need a simple majority to pass.
♦️Who’s pushing for it?
The proposal is sponsored by the "Service Employees International Union-United Healthcare Workers West",
a powerful union with more than 120,000 members.
It also has support from Ro Khanna, Silicon Valley’s representative in Congress.
“A billionaire tax is good for American innovation which depends on a strong and thriving American democracy,”
Khanna wrote on X.
A Democrat, Khanna has enjoyed wide support from tech founders.
Venture capitalist David Sacks threw him a fundraiser in 2023,
and Peter Thiel donated to his campaign in 2011.
So Khanna’s support for the initiative has ruffled some feathers in the Valley.
♦️Who really, really doesn’t want it?
Those 200 billionaires, of course.
But also Gov. Gavin Newsom, who has begun raising money for a committee to oppose the ballot measure, according to The New York Times.
“You can’t isolate yourself from the 49 other states,” Newsom said
this month.
“We’re in a competitive environment.
You’ve got to be pragmatic about it.”
♦️Wait, what about paper billionaires
— those people who are worth 9 zeros only because of startup equity?
This is one of the main complaints from Silicon Valley:
In the past five years, many AI startups have been valued in the billions of dollars.
But tech is fickle, and today’s princess could be tomorrow’s toad.
Any of the darlings could fail in the next few years
— but if the tax measure passes,
the founders would conceivably still be on the hook for millions.
The initiative makes an effort to account for this possibility,
with some fancy math about valuations.
But none of that soothes Silicon Valley.
“If it passes, the net effect will only be the destruction of the SV startup ecosystem,”
Replit founder Amjad Masad wrote on X.
(Replit is valued at more than $3 billion.)
Khanna has tried to address those concerns.
“I oppose capital gains on unrealized gains,” he wrote.
“I support a 1-2 percent wealth tax on established billionaires
with workarounds for founders who have illiquid assets and unprofitable companies.”
Billionaire tax FAQ
Everything you need to know about the Billionaire Tax
