By Eliyahu Kamisher and Biz Carson, Bloomberg
A proposed tax on California’s wealthiest residents is drawing opposition from a growing group of top state Democrats, including a US representative for Silicon Valley and Katie Porter, the former congresswoman now running for governor.
To Porter, who’s known for progressive stances on consumer protections and health care, forcing California billionaires to pay a one-time 5% tax “could end up hurting our ability to fund other key priorities like education and food assistance and make it harder to sustainably fund California‘s needs,” she said in a statement.
Sam Liccardo, who represents some of the country’s wealthiest communities in Silicon Valley, said that if the tax is approved, “California’s biggest taxpayers will become Texas’s biggest taxpayers.”
Their opposition adds to mounting concerns among some of California’s top politicians on the fallout of the proposed wealth tax, a ballot initiative that was proposed by a California union as a way to fund health care. Governor Gavin Newsom has warned against the proposal, which has yet to qualify for a statewide vote in November and would apply retroactively to January 2026 if passed. Already, a group of billionaires has left the state.
“What we know about the innovation economy is that taxing unrealized gains is the surest way to drive venture capitalists and with them early stage founders out of the state,” Liccardo said in an interview.
He argued the way the measure is written would unfairly tax startup founders and venture capitalists based on private market valuations, which can fluctuate widely. He also questions the use of a one-time revenue source to fund critical state programs such as health care and education, calling it a recipe for disaster.
“I’m perfectly fine with billionaires paying much more but let’s do it in a way that doesn’t kill California’s golden goose or transform California’s golden goose into Texas’ golden goose,” Liccardo said.
Democrats are struggling to navigate the tax proposal, which was put forward by an influential health care union that must collect nearly 900,000 signatures to qualify for the ballot. The tax would generate tens of billions in one-time revenue, but it could end up costing the state hundreds of millions per year in long-term revenue should billionaires choose to leave, according to a state analysis of the measure. The money is earmarked to pay for funding shortages in health care, education and food assistance.
Senator Bernie Sanders along with ally Congressmen Ro Khanna have endorsed the measure, prompting days of backlash from Silicon Valley elite with some promising to put forward a challenger in Khanna’s upcoming election.
The wealth tax is also reverberating across the wide-open race to succeed Newsom as the next California governor.
Tom Steyer, also a billionaire, said he supports a national wealth tax but warned of “unintended consequences” on the California measure, without explicitly opposing it.
“I believe we should be taxing billionaires more,” Steyer said at a press conference last week, adding that he does not want to “jump the gun” on the measure.
Porter had also supported wealth taxes during her time in Congress. Now running for governor, she embraced a less combative stance toward the state’s wealthiest people — with billionaire Chris Larsen among her top donors.
Liccardo, the Silicon Valley representative, said he’s talked directly with three billionaires who have left for Wyoming, Utah and Texas. His main concern is what happens to the state’s tech industry if venture capitalists and founders depart.
“It’s not about Elon Musk. We lost him a long time ago, and frankly, I’m not that interested in trying to get him back,” Liccardo said. “I’m much more interested in the startups of the future, the early stage companies. The future will not be here if the VCs that fund that future decide they want to be somewhere else, because where the VCs are, the startup founders follow.”
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