Silicon Valley made a fortune betting on disruption. Now some of the most recognizable names in venture capital and Big Tech are spending millions to disrupt California\u2019s plan to tax them.<\/p>\n
Campaign finance records show<\/a> Palantir<\/a> cofounder Peter Thiel, crypto billionaire Chris Larsen, Google cofounder Sergey Brin, and longtime venture capitalist John Doerr donated to political action committees opposing Proposition 40, which would levy a one-time tax on billionaires equal to 5% of their wealth<\/a> if passed. Thiel officially cut ties with California in 2025 ahead of the proposed wealth tax, and Brin has also reduced his official and financial ties to the state.<\/p>\n Larsen gave $5 million to Golden State Promise, a committee opposing Proposition 40, and Ripple Labs, the company he cofounded, has put in another $5 million.\u00a0<\/p>\n Another anti-Proposition 40 committee representing teachers, doctors, and small businesses has received $5 million from Building a Better California, whose top donors are Brin and Doerr. Golden State Promise has also received $450,000 from the California Business Roundtable Issues PAC, one of whose top donors is Thiel, who has given $3 million<\/a> to the PAC itself.\u00a0\u00a0<\/p>\n The stakes are high for the donors. Experts estimate<\/a> Proposition 40, if passed, will raise $100 billion for California over five years, with 90% earmarked for health care and the rest for food assistance and education. For someone whose net worth is $1.1 billion, the liability is $55 million, according to an analysis<\/a> from Wealth Management. If the opposition defeats the ballot measure in November, billionaires will avoid that liability.\u00a0<\/p>\n Silicon Valley and Washington flashpoint<\/strong><\/p>\n The multimillion-dollar checks are landing as California\u2019s proposed wealth tax turned into a broader fight about whether taxing billionaire wealth would raise needed funds\u2014or push founders and investors to move out of the state.<\/p>\n Over the weekend, billionaire entrepreneur and investor Mark Cuban publicly sparred over this question with Rep. Ro Khanna (D-Calif.), one of the most prominent defenders of the proposed tax. Cuban argued Prop. 40 misunderstands<\/a> founders can be billionaires on paper while still being cash-poor and could drive startup talent out of the state entirely.\u00a0<\/p>\n \u201cIf this passes, only idiot startup founders stay in Cali,\u201d Cuban wrote on X.<\/p>\n Khanna pushed back by arguing truly illiquid \u201cpaper billionaires\u201d make up only part of the population the tax would hit, and suggested a workaround in which founders could hand over their shares in the startup to the state in exchange for a loan to pay the tax.\u00a0<\/p>\n \u201cThe government would still collect from the vast majority of billionaires who are not illiquid,\u201d Khanna wrote.\u00a0<\/p>\n Emmanuel Saez, director of UC Berkeley\u2019s James M. and Cathleen D. Stone Center on Wealth and Income Inequality and co-author of an expert report <\/a>on Prop. 40 arguing the tax asks a fair share from the roughly 250 Californians it would cover\u2014billionaires the report says built their fortunes in the state and can absorb a one-time hit, especially if paid gradually. Saez told Fortune over email founders without the immediate money to pay the tax can \u201cuse a deferral option,\u201d paying 5% of \u201cwhatever proceeds they take out of their business (as dividends or sales of stock) moving forward.\u201d<\/p>\n \u201cIf the business fails, they won\u2019t have to pay anything,\u201d Saez said. \u201cIf the business succeeds, they\u2019ll have to pay 5% of that success eventually.\u201d<\/p>\n