Rogé Karma: “To hear some Silicon Valley insiders tell it, California is on the verge of economic suicide. This November, Californians will likely vote on a ballot initiative that would levy a one-off tax on the wealth of about 200 of the state’s richest residents. Garry Tan, the CEO of the start-up incubator Y Combinator, posted on X that the measure would ‘kill and eat the golden goose of technology startups in California.’ Investors and tech executives are threatening to leave the state. Governor Gavin Newsom, who has been angling for a centrist presidential pivot, has vowed to ‘do what I have to do’ to stop the initiative …
“The California wealth-tax idea originated as a response to a federal tax cut. Donald Trump’s One Big Beautiful Bill Act lowered taxes for corporations and rich individuals and paid for those cuts in part by reducing Medicaid spending. That left a roughly $20 billion annual shortfall in California’s health-care budget. If left unfilled, that could cause 1.6 million low-income Californians to lose their health care, according to the Kaiser Family Foundation. In response, one of the state’s largest health-care-employee unions teamed up with a group of progressive economists and lawyers to come up with a way to make up the difference: impose a one-off 5 percent wealth tax on California’s billionaires.
“The logic is simple enough: The ultra-wealthy, who amass their fortunes by owning assets as opposed to earning wages, pay very little in income taxes. According to calculations by the Berkeley economist Emmanuel Saez, who helped design the proposal, California’s billionaires pay approximately $3 billion to $4 billion a year in state income taxes, or less than 0.2 percent of their collective net worth of $2.2 trillion. He and the other architects of the ballot initiative determined that tapping into this pool of mostly untaxed wealth would be the most economically fair way to raise the money California needs, especially given that those same billionaires had just received a major tax break from Trump …
“One serious objection to imposing a wealth tax at the state level is that it will trigger a process known as capital flight: When faced with the prospect of losing a sizable chunk of their fortune, wealthy individuals might leave the state altogether. If enough people make that choice, a wealth tax could backfire, resulting in lower long-term tax revenues. Many Silicon Valley critics of the ballot initiative have claimed that the proposal would give them virtually no choice but to leave. They say that it would result in massive tax bills that would force founders to sell off their companies, push entrepreneurs into bankruptcy, and ultimately make it impossible to build a successful company in California …
“Contrary to what its opponents claim, moreover, the tax is carefully designed to avoid the most common objections. If billionaires are worried that the government will improperly value their assets, they can submit independent third-party appraisals. If they can’t come up with the full 5 percent all at once, they can spread out payments over five years, though they would be charged interest. If their fortunes are tied up in ‘illiquid assets’ such as a privately held start-up, they can defer the tax rather than having to sell their stake. ‘So many of these criticisms are either completely ignorant or made in bad faith,’ Brian Galle, a law professor at UC Berkeley who helped write the bill, told me. ‘I think it’s pretty clear that these guys will basically say anything to protect their giant mountains of wealth.’”
“Even if the wealth tax wouldn’t nuke the state’s tech start-ups, however, it would roughly quadruple the amount that California’s billionaires currently pay annually in taxes. And if most empirical research suggests that the superrich do not tend to move in response to state-level tax hikes, none of that research has considered a tax nearly as large as what is being proposed in California.”
We have been hearing this for a decade how much has California’s economy grown since then.
BicycleGripDick on
So the options are, 1. Let them stay untaxed or 2. Tax them and see if they all don’t leave. Since you aren’t getting any revenue in option 1, the chance of some revenue in option 2 is worth it. If they leave then they have to sell their assets and you’ll make money off of that at least. If they don’t sell them and still leave then they lose their homestead exemption. No matter what at the very least you’ll make an incremental gain.
Ramenchase on
So stupid, this is just a fake claim already proven false. Why aren’t they all living in Alaska if taxes are so bad?
gumercindo1959 on
I can’t comment on the California wealth tax (Cali is a huge state so there may be other factors at play here) but the threat of higher taxes in NyC has not shown a mass exodus of that city. In fact, I believe real estate purchases of high value properties has actually increased YoY.
beepingclownshoes on
Wasn’t that the saber rattle of Mamdani’s New York? And then didn’t MORE millionaires move into the city?
annon8595 on
Why are the most industrialized nations and states have the highest taxes?
camsle on
I think it would go over alot easier if the government wasnt so fucked up and actually did positive uplifting things for the communities with that tax revenue. Its not a CA thing its a poorly run govt thing local,state, and federal.
Nevermind_times2 on
I always wonder what will actually happens if all super riches leaves… like what will it affect me personally? They take their company away? But won’t someone less rich too the vacancy and start multiple smaller companies? Like so far I cannot think of a reason why I should be afraid that rich people leave.
jh937hfiu3hrhv9 on
5% over five years is going to result in “massive tax bills that would force founders to sell off their companies, push entrepreneurs into bankruptcy, and ultimately make it impossible to build a successful company in California”? Really? No. Somebody help them with the math. They just continue to prove they are non contributing assholes.
12 Comments
Rogé Karma: “To hear some Silicon Valley insiders tell it, California is on the verge of economic suicide. This November, Californians will likely vote on a ballot initiative that would levy a one-off tax on the wealth of about 200 of the state’s richest residents. Garry Tan, the CEO of the start-up incubator Y Combinator, posted on X that the measure would ‘kill and eat the golden goose of technology startups in California.’ Investors and tech executives are threatening to leave the state. Governor Gavin Newsom, who has been angling for a centrist presidential pivot, has vowed to ‘do what I have to do’ to stop the initiative …
“The California wealth-tax idea originated as a response to a federal tax cut. Donald Trump’s One Big Beautiful Bill Act lowered taxes for corporations and rich individuals and paid for those cuts in part by reducing Medicaid spending. That left a roughly $20 billion annual shortfall in California’s health-care budget. If left unfilled, that could cause 1.6 million low-income Californians to lose their health care, according to the Kaiser Family Foundation. In response, one of the state’s largest health-care-employee unions teamed up with a group of progressive economists and lawyers to come up with a way to make up the difference: impose a one-off 5 percent wealth tax on California’s billionaires.
“The logic is simple enough: The ultra-wealthy, who amass their fortunes by owning assets as opposed to earning wages, pay very little in income taxes. According to calculations by the Berkeley economist Emmanuel Saez, who helped design the proposal, California’s billionaires pay approximately $3 billion to $4 billion a year in state income taxes, or less than 0.2 percent of their collective net worth of $2.2 trillion. He and the other architects of the ballot initiative determined that tapping into this pool of mostly untaxed wealth would be the most economically fair way to raise the money California needs, especially given that those same billionaires had just received a major tax break from Trump …
“One serious objection to imposing a wealth tax at the state level is that it will trigger a process known as capital flight: When faced with the prospect of losing a sizable chunk of their fortune, wealthy individuals might leave the state altogether. If enough people make that choice, a wealth tax could backfire, resulting in lower long-term tax revenues. Many Silicon Valley critics of the ballot initiative have claimed that the proposal would give them virtually no choice but to leave. They say that it would result in massive tax bills that would force founders to sell off their companies, push entrepreneurs into bankruptcy, and ultimately make it impossible to build a successful company in California …
“Contrary to what its opponents claim, moreover, the tax is carefully designed to avoid the most common objections. If billionaires are worried that the government will improperly value their assets, they can submit independent third-party appraisals. If they can’t come up with the full 5 percent all at once, they can spread out payments over five years, though they would be charged interest. If their fortunes are tied up in ‘illiquid assets’ such as a privately held start-up, they can defer the tax rather than having to sell their stake. ‘So many of these criticisms are either completely ignorant or made in bad faith,’ Brian Galle, a law professor at UC Berkeley who helped write the bill, told me. ‘I think it’s pretty clear that these guys will basically say anything to protect their giant mountains of wealth.’”
“Even if the wealth tax wouldn’t nuke the state’s tech start-ups, however, it would roughly quadruple the amount that California’s billionaires currently pay annually in taxes. And if most empirical research suggests that the superrich do not tend to move in response to state-level tax hikes, none of that research has considered a tax nearly as large as what is being proposed in California.”
Read more: [https://theatln.tc/sb9HknSf](https://theatln.tc/sb9HknSf)
Oh, another don’t tax the rich boogeyman.
that sounds like a perk
We have been hearing this for a decade how much has California’s economy grown since then.
So the options are, 1. Let them stay untaxed or 2. Tax them and see if they all don’t leave. Since you aren’t getting any revenue in option 1, the chance of some revenue in option 2 is worth it. If they leave then they have to sell their assets and you’ll make money off of that at least. If they don’t sell them and still leave then they lose their homestead exemption. No matter what at the very least you’ll make an incremental gain.
So stupid, this is just a fake claim already proven false. Why aren’t they all living in Alaska if taxes are so bad?
I can’t comment on the California wealth tax (Cali is a huge state so there may be other factors at play here) but the threat of higher taxes in NyC has not shown a mass exodus of that city. In fact, I believe real estate purchases of high value properties has actually increased YoY.
Wasn’t that the saber rattle of Mamdani’s New York? And then didn’t MORE millionaires move into the city?
Why are the most industrialized nations and states have the highest taxes?
I think it would go over alot easier if the government wasnt so fucked up and actually did positive uplifting things for the communities with that tax revenue. Its not a CA thing its a poorly run govt thing local,state, and federal.
I always wonder what will actually happens if all super riches leaves… like what will it affect me personally? They take their company away? But won’t someone less rich too the vacancy and start multiple smaller companies? Like so far I cannot think of a reason why I should be afraid that rich people leave.
5% over five years is going to result in “massive tax bills that would force founders to sell off their companies, push entrepreneurs into bankruptcy, and ultimately make it impossible to build a successful company in California”? Really? No. Somebody help them with the math. They just continue to prove they are non contributing assholes.