California’s 5% Billionaire Wealth Tax Unites Silicon Valley’s Tech Elite in Unprecedented Alliance

Silicon Valley's wealthiest founders and investors are forming an unlikely coalition—not over the next disruptive app, but against a proposed state tax targeting fortunes over $1 billion.

The Unlikely Alliance

Forget crypto wars or AI ethics debates. California's push for a 5% annual wealth tax on billion-dollar fortunes has created something rarer than a profitable startup: unanimous opposition from tech's competing factions. Venture capitalists who normally battle over deals are now pooling resources for legal challenges. Founders who built empires on disruption are suddenly preaching fiscal stability.

The Tax Mechanics

The proposal doesn't just skim profits—it targets total net worth annually, including unrealized gains in private company stock and investment portfolios. That means billionaires would pay whether they cash out or not, hitting Silicon Valley's wealth structure where it lives: in equity that hasn't touched a public market.

The Migration Math

Texas and Florida recruitment teams are reportedly circling like vultures, offering what one insider called 'the ultimate growth hack: keeping what you earn.' Several high-profile tech leaders have already quietly established residency elsewhere—a trend that could accelerate if the tax passes.

The Philosophical Divide

Proponents argue the tax funds social programs in the state that enabled these fortunes. Opponents counter it punishes success and will drive innovation elsewhere. Both sides agree on one thing: this isn't about politics—it's about portfolio management on a galactic scale.

The irony? Many of these billionaires built empires optimizing tax codes, only to discover that when you're rich enough, you become the optimization target. Sometimes the most disruptive technology is an old-fashioned government spreadsheet.

How the tax would work

The proposed measure would apply to all of a person’s assets worldwide, including shares in both publicly traded and private companies, plus items like art. It would not count certain retirement accounts or real estate. To get on the November ballot, supporters need about 875,000 signatures. A simple majority of voters would need to approve it. The tax would apply retroactively to anyone who lived in California on Jan. 1, 2026.

Nvidia’s CEO Jensen Huang, who lives in the Bay Area and has roughly $150 billion, said he would accept the tax.

The union estimates the money would help offset healthcare funding cuts in the Republican tax bill that President Trump signed last year. Debru Carthan, who serves on the union’s executive committee, said in a statement: “We’re simply trying to keep emergency rooms open and save patient lives…the few who left have shown the world just how outrageously greedy they truly are.”

Some chat members said they don’t want to leave California, where their families live, but feel frustrated with Rep. Ro Khanna, whose district covers Silicon Valley. He has publicly supported the tax. The New York Times previously reported that some billionaires privately discussed trying to remove Khanna from office.

Search for compromise solutions

Khanna said in an interview that the tax needs adjustments so it doesn’t affect shares that people can’t easily sell, or voting shares. “There has to be some provisions in addressing that,” he said. He’s working to get tech leaders and union representatives talking.

David Gamage, a law professor at the University of Missouri who helped write the proposal, said people wouldn’t be forced to sell their shares. They could borrow money using their assets or delay payments.

Some billionaires have suggested giving the government stock for about 10 years as a no-interest or low-interest loan, taxing loans made using assets, or only taxing publicly traded stock. Phone discussions are planned for next week.

On the Signal chat, some participants have raised concerns that economic growth slowed in countries that enacted wealth taxes. Discussion also touched on the benefits Silicon Valley gets from having tech founders, companies, investors, and universities clustered together. Some feared an exodus would reduce this advantage.

Supporters of the tax point to the growth of many California companies, including recent gains in artificial intelligence, and say the state’s billionaires would remain among the world’s richest after the tax.

Advisers working with the union say the 5% rate is modest because billionaires’ wealth has been growing an average of 7.5% yearly, accounting for inflation.

San Francisco accountant Richard Pon, who works with extremely wealthy clients and typically votes Republican because of tax views, supports this proposal. “I’m not going to be a billionaire,” Pon said. “It’s never going to impact me.”

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