Silicon Valley Billionaires Panic Over California’s Proposed Wealth Tax

Did California lose? Larry Page? The Google and Alphabet co-founder, who left day-to-day operations in 2019, has seen his net worth increase over the past few years — from about $50 billion at the time of his departure to about $260 billion today. (Quitting his job apparently didn’t hurt his wallet.) Last year, a proposed ballot initiative in California threatened billionaires like Page with a one-time 5 percent wealth tax — prompting some of them to consider leaving the state before the end of the year, when the tax, if passed, would apply retroactively. It seems Page is one of those turncoats; The Wall Street Journal reported that he recently spent more than $170 million on two homes in Miami. The article also hinted that their co-founder Sergey Brin could also become a Florida man.

The Google guys, formerly the California icon, are just two of about 250 billionaires subject to the scheme. It is not certain whether many of them have departed for Florida, Texas, New Zealand or a space station. But it’s clear that plenty of vocal billionaires and other super-rich people are publicly racking their brains about the proposal, which will appear on the November ballot if it gets about 875,000 signatures. Hedge fund magnate Bill Ackman calls it “disastrous.” The world’s richest man Elon Musk claimed he already pays a lot of taxes, even one year after he claimed his tax returns broke the IRS computers.

Yet, when considered as a percentage of income, even the large sums paid by some billionaires are significantly lower than the tax rates paid each year by many teachers, accountants and plumbers. If Musk, who is currently worth an estimated $716 billion, were to pay a 5 percent wealth tax, he would likely be able to amass a $680 billion nest egg as well as enough money to buy Ford, General Motors, Toyota and Mercedes. still Remain the richest man in the world. (In any case, he is protected from California taxes; he moved to Texas a few years ago.)

California politicians, including Governor Gavin Newsom, generally oppose the initiative. One glaring exception is Representative Ro Khanna, who told WIRED in a statement that she is “in favor of imposing a modest wealth tax on billionaires to tackle shocking inequality and ensure people get health care.”

Khanna may have to pay a price for taking on the rich and may face a primary challenge from the elite class. A safe position for Bay Area politicians is one taken by San Jose Mayor Matt Mahan. He recently posted a tweet stream opposing the bill, saying that if California passed a wealth tax it would be like cutting off his nose to make his face worse. When I talk to Mahan, he emphasizes the risks of California standing alone in taxing the net worth of billionaires. “This jeopardizes our innovation economy, which is the real engine of economic growth and opportunity,” he says. (Mahan isn’t very rich, but he is a billionaire: He was once CEO of the company founded by former Facebook chairman Sean Parker.)

Because of the mobility of wealthy people, there are real concerns about the impact of the state estate tax in California. Not being a billionaire myself, I find the idea baffling – moving away from your ideal home to avoid a tax that has no impact on your standard of living is, in Mahan’s words, like cutting off your nose to make your face worse.

Furthermore, I don’t understand why the exodus of billionaires means the end of Silicon Valley as a center of technological innovation. if you want to become There’s no better place for a billionaire than the Bay Area, which has an ecosystem that nurtures innovative businesses. He is not changing. A few years ago, some tech people moved to Miami claiming that it was going to become the new Silicon Valley. It did not happen.