{"id":144629,"date":"2026-01-22T12:20:07","date_gmt":"2026-01-22T12:20:07","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/144629\/"},"modified":"2026-01-22T12:20:07","modified_gmt":"2026-01-22T12:20:07","slug":"billionaire-tax-proposal-roils-bay-area-havens-for-the-super-rich","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/144629\/","title":{"rendered":"Billionaire tax proposal roils Bay Area havens for the super-rich"},"content":{"rendered":"

When billionaire venture capitalist Vinod Khosla publicly branded Rep. Ro Khanna a \u201ccommie comrade\u201d over the weekend<\/a>, it was more than a personal jab \u2014 it was a sign of how fiercely a new proposal to tax California\u2019s billionaires is dividing Silicon Valley and the state\u2019s political class.<\/p>\n

The proposal, which would impose a one-time \u201cemergency tax\u201d on the net worth of California<\/a> residents worth more than $1 billion, is roiling some of the Bay Area\u2019s havens for the ultra-wealthy and setting off a vitriolic political fight over how far the state should go to fund its health care system \u2014 and whether the super-rich will tolerate it.<\/p>\n

RELATED: More than half of California\u2019s billionaires call the Bay Area home: Who are they?<\/a><\/p>\n

Over the weekend, anger among some of Silicon Valley\u2019s most affluent hit a crescendo, with Khosla attacking Khanna\u00a0for supporting the initiative to put the tax on November\u2019s ballot<\/p>\n

Of the roughly 200 billionaires in California, more than half call the Bay Area home.<\/p>\n

Topping the California billionaires list, according to Forbes, are the founders and leaders of Silicon Valley\u2019s technology giants \u2014 Larry Page and Sergey Brin of Google, Mark Zuckerberg of Meta and Jensen Huang of Nvidia \u2014 along with a constellation of venture capitalists and crypto executives.<\/p>\n

Many live in some of the nation\u2019s wealthiest enclaves, from Atherton and Hillsborough to Portola Valley.<\/p>\n

Khosla, a Sun Microsystems co-founder and early investor in Google and Amazon, lives in Portola Valley.<\/p>\n

But now, the Service Employees International Union\u2013United Healthcare Workers West has poked a gilded hornets\u2019 nest with a proposed ballot initiative to take a 5% bite of each billionaire\u2019s wealth \u2014 including publicly traded stock and private holdings that are not always easy to cash in. The levy could be paid over five years, with an annual fee of 7.5% of the remaining balance.<\/p>\n

Supporters say the measure, known as the California Billionaires Tax Act, could send as much as $100 billion into state coffers, to help stabilize a health care system facing a massive funding shortfall.<\/p>\n

They argue the hole was created by President Donald Trump\u2019s new budget bill, which cuts billions in federal spending while tightening Medicare and Medicaid eligibility. Without new revenue, proponents contend, California would be forced to slash services or shift the burden onto ordinary taxpayers.<\/p>\n

Authors of the proposal said in a report<\/a> that the collective wealth of California billionaires skyrocketed from $300 billion in 2011 to $700 billion in 2019 to $2.2 trillion as of last October. Meanwhile, they wrote, billionaires now pay a far smaller share of their wealth in taxes than they did when Ronald Reagan was president.<\/p>\n

\u201cIt\u2019s not some gigantic amount that we\u2019re asking for,\u201d said Darien Shanske, a UC Davis School of Law professor and one of the proposal\u2019s authors. \u201cIt\u2019s not a lot of money for people in this class.\u201d<\/p>\n

Russell Hancock, CEO of the think tank Joint Venture Silicon Valley, said that on first blush the proposal might seem a slam dunk.<\/p>\n

\u201cSilicon Valley\u2019s an economy that mints millionaires and billionaires, and a lot of them,\u201d Hancock said. But, he added, \u201cdoes it actually come back to haunt us?\u201d<\/p>\n

The state Legislature\u2019s nonpartisan Legislative Analyst\u2019s Office projected the tax could generate <\/a>tens of billions of dollars beginning in 2027 and spread over several years. But it warned \u201cit is likely that some billionaires decide to leave California,\u201d potentially costing the state hundreds of millions of dollars or more each year in lost income taxes.<\/p>\n

Proponents expect the measure to raise $100 billion from 2027 to 2031. The Legislative Analyst\u2019s Office cautioned, however, that the amount is highly uncertain because billionaires could restructure their finances to reduce their exposure and because much of their wealth is tied to volatile stock prices.<\/p>\n

Critics of the proposal point to reports that Page and Brin have begun shifting business operations out of state. Would-be founders, they warn, could take their ideas and startups elsewhere.<\/p>\n

\u201cThis is stupid tax policy,\u201d said John Grubb, interim CEO of the Bay Area Council, which represents businesses including major technology firms. \u201cIt drives capital and people out of the state, shrinks the tax base and leaves everyone else paying more for fewer services.\u201d<\/p>\n

Silicon Valley startup guru and Stanford University adjunct professor Steve Blank called the tax \u201ca self-destructive act\u201d that would \u201cstrangle innovation in its crib.\u201d<\/p>\n

Gov. Gavin Newsom and San Jose Mayor Matt Mahan, who is weighing a run for governor<\/a>, have both attacked the proposal, saying it would harm California as a single state acting on its own.<\/p>\n

Silicon Valley Democratic Rep. Khanna, however, said Californians \u201cmust balance Silicon Valley\u2019s engine of prosperity while ensuring that we don\u2019t abandon millions who won\u2019t have health care because of Trump\u2019s tax bill, and hundreds of thousands of nurses and home care workers who will be laid off.\u201d<\/p>\n

The congressman, who attributed Democratic-donor Khosla\u2019s<\/a> \u201ccommie\u201d jab to \u201cpassion for Silicon Valley,\u201d cited UC Berkeley researchers\u2019 findings<\/a> that the wealthier a person is, the lower their effective income tax rate \u2014 largely because most wealth is only taxed when assets are sold.<\/p>\n

A provision in the proposal would allow holders of illiquid assets, such as startup equity and stakes in private companies, to defer taxes until they take money out of those investments.<\/p>\n

David Lesperance, a tax and immigration lawyer who advises ultra-wealthy clients, said he has already helped three Silicon Valley billionaires leave California to escape the potential tax.<\/p>\n

The proposal was filed with state authorities the day before Thanksgiving. Should it pass, any billionaire seeking to avoid the tax would have had to establish legal residence outside California by Dec. 31 of last year \u2014 just a month later.<\/p>\n

\u201cOver Thanksgiving, people really started reading it and going, \u2018Oh, oh, oh,’\u201d Lesperance said. \u201cIt was a pretty frantic December and it\u2019s been fairly frantic ever since.\u201d<\/p>\n

Whether such moves would succeed remains an open question. California\u2019s Franchise Tax Board is known for aggressively challenging claims of out-of-state residency.<\/p>\n

Guidelines<\/a> show the agency considers how much time a person spends outside California, where their family and primary home are located, the location of bank accounts and doctors, permanence of work in the state and even affiliations with churches and country clubs.<\/p>\n

If the board rules that someone claiming to have moved out of state by Dec. 31 lacks sufficient evidence, \u201cthey\u2019re totally on the hook for the tax,\u201d Shanske said. \u201cThe notion that this is some simple thing, that they\u2019re calling in from their Miami penthouse and therefore they\u2019re done, that\u2019s not true.\u201d<\/p>\n

Shanske dismissed predictions of mass billionaire flight, citing research showing relatively few wealthy households relocate in response to new taxes. Nvidia\u2019s Huang, for one, has signaled little concern, telling Bloomberg he is \u201cperfectly fine with it<\/a>.\u201d<\/p>\n

Grubb, of the Bay Area Council, said the tax is not the right remedy for the health care budget gap.<\/p>\n

\u201cOne solution,\u201d he said, \u201cwould be to attract more high net worth individuals to move here rather than encouraging them to leave.\u201d<\/p>\n

Many critics fear a slippery slope that would deter innovation in California more broadly by targeting wealthy people who aren\u2019t billionaires.<\/p>\n

\u201cIt\u2019s very easy to imagine that if this ends up on the ballot that there\u2019s another initiative on the ballot next year that\u2019s $100 million,\u201d Blank said, \u201cand the year after that it\u2019s $50 million.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"When billionaire venture capitalist Vinod Khosla publicly branded Rep. Ro Khanna a \u201ccommie comrade\u201d over the weekend, it…\n","protected":false},"author":2,"featured_media":144630,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[29],"tags":[389,72333,184,764,387,7,5307,8,400,332,383,204,41759,181,23,205,188,189,100,195,395,2650,13,24403,6573,101,396,88,90,89,397,197,198,1498,3234,2280,200,1747,1970,398,7620],"class_list":["post-144629","post","type-post","status-publish","format-standard","has-post-thumbnail","category-san-jose","tag-alameda-county","tag-atherton","tag-bay-area","tag-berkeley","tag-business","tag-california","tag-california-ballot-measures","tag-california-news","tag-california-politics","tag-east-bay","tag-economy","tag-election","tag-hillsborough","tag-latest-headlines","tag-local-news","tag-local-politics","tag-los-altos","tag-los-altos-hills","tag-news","tag-palo-alto","tag-peninsula","tag-pleasanton","tag-politics","tag-portola-valley","tag-san-carlos","tag-san-francisco","tag-san-francisco-county","tag-san-jose","tag-san-jose-headlines","tag-san-jose-news","tag-san-mateo-county","tag-santa-clara","tag-santa-clara-county","tag-santa-cruz","tag-santa-cruz-county","tag-silicon-valley","tag-south-bay","tag-tax","tag-technology","tag-tri-valley","tag-woodside"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/144629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/comments?post=144629"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/posts\/144629\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media\/144630"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/media?parent=144629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/categories?post=144629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ca\/wp-json\/wp\/v2\/tags?post=144629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}