{"id":254870,"date":"2026-04-07T00:29:10","date_gmt":"2026-04-07T00:29:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ca\/254870\/"},"modified":"2026-04-07T00:29:10","modified_gmt":"2026-04-07T00:29:10","slug":"the-architects-of-californias-wealth-tax-idea-want-to-clarify-things","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ca\/254870\/","title":{"rendered":"The architects of California’s wealth tax idea want to clarify things"},"content":{"rendered":"

The richest Californians are worried a controversial proposal to levy a one-time tax on their wealth<\/a> might actually take more of their net worth than intended.\u00a0<\/p>\n

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The text of the proposed ballot measure<\/a> calls for a one-time 5% wealth tax on an estimated 200 taxpayers and trusts with assets valued over $1 billion. The tax could be paid in 1% installments over five years.\u00a0<\/p>\n

The proposal is still in the signature-gathering phase, but if it qualifies for the ballot \u2014 which the organizers expect \u2014 then anyone with a net worth over a billion dollars living in California as of Jan. 1, 2026, would be on the hook for the payment. As the proposal made headlines, at least six high-profile billionaires left California<\/a>, including Peter Thiel, who opened an office in Miami, and venture capitalist David Sacks, who opened one in Austin, Texas. Google co-founders Larry Page and Sergey Brin also converted some of their business interests out of state to the Nevada side of Lake Tahoe<\/a>.<\/p>\n

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Those moves, opponents argue, support their claim that the tax will lead to lost innovation in California. Another criticism of the proposal is how it values wealth altogether, with startup workers protesting that they could be subject to the tax due to high valuations for shares they own in their companies, well before those valuations translate to actual cash wealth. Now, there\u2019s yet another layer of concern.\u00a0<\/p>\n

Opponents have argued that another asset could also be quietly taxable: founders\u2019 super-voting shares of their companies. Super-voting shares are different from actual shares of a company in that they give founders and early employees increased decision power over their companies. A popular example is Meta founder Mark Zuckerberg, who owns about 13.7% of his company via shares but has retained 61% voting control. Opponents of the billionaire tax argue that the state could interpret the measure in such a way that someone like Zuckerberg would be taxed as if he owns two-thirds of the company, based on his voting power, rather than based on the smaller percentage he owns in shares (which is still valued at over $200 billion).<\/p>\n

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Loudly sounding alarms on this is Garry Tan, the San Francisco venture capitalist and CEO of Y Combinator who often opposes progressive causes in California<\/a>. He said in\u00a0January that<\/a> the billionaire tax would \u201cconfiscate\u201d as much as 50% of the wealth of some billionaires, like Zuckerberg or like Page and Brin, who own 10 times the voting shares in Alphabet that they do actual stock.\u00a0<\/p>\n

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The architects of the wealth tax proposal have responded to these claims, calling them \u201cmisinformation\u201d in an open letter first obtained by SFGATE.<\/p>\n

\u201cAny claim that holders of voting or control shares in public companies will be taxed beyond the fair market value of their shares is simply false,\u201d write tax policy professors Brian Galle from UC Berkeley, Darien Shanske from UC Davis and David Gamage from the University of Missouri. All were tapped by SEIU-UHW, the health care union behind the proposal, to craft the language of the measure.<\/p>\n

The letter, plainly addressed to \u201cCalifornia billionaires,\u201d calls any fears that these shareholders would have to sell a portion of their stocks \u201cabsurd.\u201d\u00a0<\/p>\n

\u201cWe write this letter to respond to questions and misinformation that have been raised about the valuation of \u2018voting\u2019 or \u2018special control\u2019 shares,\u201d the letter reads. \u201c… The misrepresentation spread by individuals online may have created confusion for those who would be affected.\u201d<\/p>\n

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\u201cTaxpayers will not be taxed on more than the actual market value of their holdings,\u201d it continues.<\/p>\n

Billionaires hold wealth in a variety of forms, the letter goes on to explain, and the wealth tax explicitly provides specific valuation rules for certain categories of assets and businesses. It says the 5% tax on a billionaire\u2019s net worth is a \u201crelatively modest tax\u201d and will \u201cserve a vital goal\u201d: stabilizing California\u2019s health care system. SEIU-UHW has said revenue from the tax will prevent hospital and emergency room closures and help provide Medi-Cal funding that has been lost due to Trump administration budget cuts.<\/p>\n

The proponents cite Forbes, which estimates that 72% of the wealth of California\u2019s billionaires is in the form of publicly traded stock. They say that if Zuckerberg sells 5% of his stake in Meta to pay off the tax, he will still be left with 13% ownership of Meta. They said in a February report<\/a> that \u201cnothing of substance changes for the business operations of Meta\u201d under the tax proposal.<\/p>\n

\u201cTherefore, the one-time billionaire tax will simply slightly dilute the business stakes of billionaire taxpayers and only if they choose to pay the tax in this way,\u201d the professors said.\u00a0<\/p>\n

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Galle, the UC Berkeley professor and one of the architects of the bill, told SFGATE in a phone call that billionaires should not be losing sleep over this. He said taxpayers would be taxed only at the \u201cfair market value\u201d of the stock they own, not for their voting shares.<\/p>\n

\u201cNo one is going to be subject to voting shares.\u00a0Garry obviously has no real arguments on the merits, so he is trying to cook up these fake arguments,\u201d Galle said, referring to Tan.<\/p>\n

As for Tan\u2019s other issue<\/a> \u2014 that the wealth tax is \u201cpoorly defined and designed to drive tech innovation out of California\u201d \u2014 the crafters have continued to dispute that idea<\/a>, saying in the February report that only those who are already billionaires will be impacted by the tax. \u201cAny entrepreneur who is not yet a billionaire will not have to pay anything,\u201d the report declares.<\/p>\n

The CEO of Nvidia, Jensen Huang, stood apart from most California tech leaders when he previously said<\/a> he was \u201cperfectly fine\u201d with the tax.\u00a0<\/p>\n

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Jared Walczak, a senior fellow at the California Tax Foundation, a nonprofit promoting tax policy, who calls the proposal<\/a> \u201cpoorly drafted,\u201d says\u00a0Huang\u2019s outlook could be related to the fact that the percentage of overall stock he owns in Nvidia and the percentage of super shares is the same \u2014 3.8% \u2014 so his taxable net worth would not exceed that value no matter how super-voting shares are valued.\u00a0\u00a0<\/p>\n

\u201cIf the proposal passes this November, it will be up for interpretation by the California Franchise Tax Board, who will be implementing the new tax law,\u201d\u00a0Walczak said\u00a0in a phone interview with SFGATE. He said he is concerned that the proposal could end up being misinterpreted and over-taxing about 80 billionaires who own large voting shares of their companies.<\/p>\n

\u201cI accept that they as drafters did not intend to tax public equity under a voting shares measure,\u201d Walczak continued. \u201cI believe them, that it wasn\u2019t their intent,\u201d he said, but argued there is no way within the law to control that potential interpretation.<\/p>\n

SFGATE reached out to the California Franchise Tax Board, which would be the entity in charge of collecting the new tax come 2027, for clarification about how it would interpret the measure as written. Spokesperson Andrew LePage said the board does not comment on proposed ballot initiatives.<\/p>\n

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In 2020, the same team of tax policy professors helped to write the text for a California wealth tax proposal that was co-sponsored<\/a> by now-Attorney General Rob Bonta. That proposal would have implemented an annual 0.4% tax on more than 30,000 of the richest Californians, according to Forbes<\/a>. The trio also helped\u00a0craft another wealth tax introduced<\/a> by Assemblymember Alex Lee in 2024, which would have levied an annual tax of 1% on Californians with a net worth that exceeds $50 million, and 1.5% on those worth over $1 billion. Both proposals failed in the state legislature.\u00a0<\/p>\n

Galle downplayed the risk of misinterpretation to SFGATE. He said that if, hypothetically, a billionaire filer challenges the tax board\u2019s interpretation of their return next year, a judge will be relying on public statements from the proponents over how they intended the law.<\/p>\n

\u201cThat last word will be our word,\u201d he said.<\/p>\n

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