Proposed billionaire tax in California sparks Silicon Valley uproar

Proposed one-time billionaire tax fuels rift in Silicon Valley

A proposed one-time 5% tax on the assets of California billionaires has set off a political battle in Silicon Valley, tangling Democratic Gov. Gavin Newsom in a fight against the measure even as prominent progressives endorse it.

The proposal is being advanced for a vote in November and would apply to billionaires’ stocks, art, businesses, collectibles and intellectual property, according to the Associated Press. Its backers say the tax is intended to help backfill federal funding cuts to health services for lower-income people that were signed by President Donald Trump last year.

The measure has widened a rift not only between the governor’s office and parts of the Democratic Party, but also among business groups and tech executives who argue it could alter California’s competitive landscape. The Associated Press reported that an “online war of words” over the plan has also drawn campaign spending as political committees engaged in the fight.

Newsom has long opposed state-level wealth taxes, arguing such levies would disadvantage California’s economy. AP reported that the governor is trying to block the proposal before it reaches the ballot, amid concerns it could lead to an exodus of wealth, and as he weighs political calculations that include the possibility of a presidential run.

Aaron Levie, the CEO of the Silicon Valley company Box, warned that the tax could create unintended consequences for entrepreneurship and startups. “You are really playing with fire with this one,” Levie said, adding that he fears the proposed tax would drive entrepreneurs to look elsewhere to run their companies and launch startups. He also said it would be “absurd just on pure economic and structural grounds,” even if the cause behind it is worthy, and he said he is not a billionaire.

AP reported that, while the proposed tax would affect only a relatively small slice of California’s population, it is designed to draw from a large pool of wealth. The measure is also described as applying retroactively to billionaires living in the state as of Jan. 1, raising questions about which people qualify—especially when some billionaires own property elsewhere. AP said its review found at least 25 billionaires on Forbes magazine’s 2025 list of the world’s 500 wealthiest people who either lived in California or had significant ties to the state, but it noted disputes could arise over whether individuals are full-time residents.

The political clash has split Democrats as well. The proposal has drawn support from Vermont Sen. Bernie Sanders, who endorsed it and said it should become a template for other states. “Our nation will not thrive when so few have so much while so many have so little,” Sanders said on the social platform X, according to AP. Democratic Rep. Ro Khanna, another supporter and a possible 2028 contender, mocked the idea that billionaires would threaten to flee in response to a levy framed as supporting health care for lower-income people.

Meanwhile, the Service Employees International Union—described by AP as the lead proponent—characterized the threat of an exodus as exaggerated. Suzanne Jimenez, chief of staff of SEIU-United Healthcare Workers West, said in a statement that the tax is a “workable response to a crisis created by Congress” and that it would “keep emergency rooms open, hospitals staffed and health care systems functioning.”

On the other side, the California Business Roundtable is leading an effort to defeat the measure, arguing that it would damage the state’s economy. AP reported that the group said the tax would “undermine our economy, decimate the state budget, drive investment out of the state and ultimately make everyday life more expensive for working families.”

Campaign activity has added to the pressure surrounding whether the measure will qualify for the ballot. AP said it was not clear if the proposal will make it, citing the requirement for more than 870,000 petition signatures, and it reported that millions of dollars have flowed into committees fighting over the plan.

Among the spending cited by AP, billionaire Peter Thiel—described as a founder of PayPal—gave $3 million to a committee tied to a business group opposing the tax. AP also reported that the fight is unfolding amid a broader atmosphere of economic anxiety, with both Democrats and Republicans trying to respond to rising costs as the midterm elections approach.

The measure’s arrival also comes on the heels of earlier concerns about California’s cost of living and regulatory climate. AP noted that Elon Musk moved Tesla to Austin and bought a home in Texas several years ago. It also reported that Google co-founders Larry Page and Sergey Brin have begun moving more assets to Florida, while Google did not respond to an AP inquiry about the reported moves.