{"id":59792,"date":"2026-05-06T18:04:09","date_gmt":"2026-05-06T18:04:09","guid":{"rendered":"https:\/\/www.europesays.com\/people\/59792\/"},"modified":"2026-05-06T18:04:09","modified_gmt":"2026-05-06T18:04:09","slug":"california-billionaire-tax-could-hit-tech-founders-hard","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/people\/59792\/","title":{"rendered":"California Billionaire Tax Could Hit Tech Founders Hard"},"content":{"rendered":"

(Bloomberg Opinion) — An underappreciated aspect of the one-time 5% billionaire wealth tax likely<\/a> to go before\u00a0California voters in November is that for several of the state\u2019s most prominent billionaires, the rate might be far higher than 5%. This is because the text of the proposed 2026 Billionaire Tax Act<\/a> says that in calculating the tax,\u00a0\u201cthe percentage of the business entity owned by the taxpayer shall be presumed to be not less than the taxpayer\u2019s percentage of the overall voting or other direct control rights.\u201d<\/p>\n

For Google co-founder Sergey Brin, among the most outspoken opponents<\/a> of the tax, this could mean his taxable wealth\u00a0is not the $304 billion net worth that the Bloomberg Billionaires Index<\/a> estimated when last I checked (minus the proposal\u2019s $1 billion exemption) but almost $1.2 trillion. That\u2019s what you get when you multiply Brin\u2019s 25.3% voting control of Alphabet Inc., Google\u2019s parent, with Alphabet\u2019s market capitalization of nearly $4.7\u00a0trillion. Five percent of nearly $1.2\u00a0trillion is $59 billion, or 19.5% of Brin\u2019s actual net worth. For Brin\u2019s co-founder, Larry Page, the effective tax rate could be 19.6% of his $327 billion net worth, and for Meta Platforms Inc. founder and chief executive officer, Mark Zuckerberg, 21.7% of $215 billion. The most extreme case may be\u00a0DoorDash Inc. co-founder and CEO Tony Xu, who by my calculations could owe 122% of his Forbes-estimated<\/a> $1.6\u00a0billion net worth. Capital gains taxes from selling shares to pay the billionaire tax could drive overall tax liability much\u00a0higher, Jared Walczak of the center-right Tax Foundation estimated<\/a> in January.<\/p>\n

Related:Does Paying for a Relative\u2019s Wedding Incur Gift Tax?<\/a><\/p>\n

I\u2019ve used \u201ccould\u201d rather than\u00a0\u201cwould\u201d above because several\u00a0drafters of the proposal have written<\/a> that a \u201cstraightforward reading\u201d of the voting-rights\u00a0provision \u201cin context\u201d makes clear that \u201ctaxpayers will not be taxed on value that exceeds the market value of their holdings.\u201d Having read it in context, I\u2019m not so sure about that, although I am willing to believe that the California Franchise Tax Board, which would administer the tax, is likely to go with this interpretation because doing otherwise would be crazy. In any case,\u00a0Brin, Page and Zuckerberg\u00a0aren\u2019t sticking around to find out \u2014 all have left or are leaving the state.<\/p>\n

You may also find it crazy, though, that these billionaires\u2019\u00a0voting-calculated wealth is so much greater than their actual wealth. That\u2019s due to a so-called dual-share corporate structure: As of Alphabet\u2019s recently released 2026 proxy statement<\/a>, Brin and Page respectively owned\u00a05.4% and 5.8% of\u00a0Alphabet\u2019s total shares outstanding but 42.9% and 46.5% of separate Class B shares, which get 10 votes to every one for the Class A shares that run-of-the-mill investors can buy. At Meta<\/a>, Zuckerberg owns 13.5% of total\u00a0shares\u00a0but 99.8% of Class B shares. At DoorDash<\/a>, Xu owns just 2.5% of total shares but controls all the Class B shares because his co-founders gave him an irrevocable proxy to vote theirs.<\/p>\n

Related:Why Families Don\u2019t Talk About Money<\/a><\/p>\n

These corporations are organized this way to enable their founders to retain complete control even as more and more Class A\u00a0shares are sold to outside investors.\u00a0Such violations of the principle of one vote per share were seen partly to blame for\u00a0the 1929 stock market crash, and dual-class structures were effectively banned for US public companies from the 1930s until the 1980s. They were still uncommon when Google went public in 2004 and Facebook in 2012. Of the world\u2019s 10 largest corporations by market capitalization, Alphabet and Meta are the only ones with such share structures. The lack of dual share classes\u00a0at No. 1 Nvidia Corp., which went public in 1999, helps explain\u00a0why founder and CEO Jensen Huang has greeted the wealth-tax proposal with so\u00a0much more equanimity<\/a> than some of his Silicon Valley peers.\u00a0<\/p>\n

Related:IRS Chief Claims Crackdown on Wealthy Tax Evaders Will Continue<\/a><\/p>\n

For the venture-backed Silicon Valley startups that followed in Google and Facebook\u2019s wake,\u00a0giving founders lots of extra voting power has become\u00a0standard.\u00a0Of the 31 tech companies that went public in the US in 2025, according to<\/a> University of Florida finance professor Jay Ritter, 15 had dual-share structures. This year\u2019s probably larger IPO class<\/a> will\u00a0include many more such arrangements, although at the two highest-profile potential class members, OpenAI and Anthropic, voting control appears likely to stay in\u00a0the hands of semi-independent<\/a> entities<\/a> that are supposed to keep the companies\u2019 products from killing us all.<\/p>\n

That\u2019s one\u00a0justification for a dual-share structure. At corporations where founders get the supercharged shares, the reasoning is usually that this allows visionary leaders to execute on long-term plans without having to cater to Wall Street\u2019s whims.\u00a0Tech companies with dual share classes have in fact massively outperformed those without them post-IPO, with an average three-year buy-and-hold, market-adjusted return of 13.8% in Ritter\u2019s data compared with negative 15.4% for the single-class companies. For non-tech companies, the difference is much smaller,\u00a0and for the tech companies, the results are clearly affected by the fact that in the past it was only the most promising startups that could get\u00a0investors to agree to second-class corporate citizenship. Most studies by finance and legal scholars that attempt to separate the dual-share effect from other factors have concluded<\/a> that dual-share structures actually depress shareholder returns.<\/p>\n

The weaknesses are\u00a0apparent not so much when a company is on the rise but\u00a0when it begins to struggle. If it weren\u2019t for its dual-share structure, for example<\/a>, former shoe sensation\u00a0Allbirds Inc. might have been forced by outside investors to sell several years ago\u00a0\u2014 and gotten a lot more money than the $39 million its assets brought in<\/a> this spring (I\u2019m assuming the company\u2019s subsequent pivot to artificial intelligence<\/a> will not in fact work out). The messy, contentious American system of activist\u00a0investors having the power to\u00a0push for changes at underperforming\u00a0public companies seems to kinda-sorta work, and foreclosing that possibility for eternity may be a big mistake<\/a>.<\/p>\n

It\u2019s definitely in fashion, though. Elon Musk doesn\u2019t have a special class of shares at Tesla Inc. and has had to go to great and controversial lengths to get the company\u2019s board to give him more voting power by way of a gigantic pay package; he\u2019s reportedly<\/a> angling to avoid all that at SpaceX with dual share classes. In incorporation-hotspot Delaware, Tesla\u2019s reincorporation in Texas after an unfavorable court ruling on Musk\u2019s pay package led the state legislature to rewrite the\u00a0law<\/a> to make it\u00a0more amenable to controlling shareholders. The second Trump administration has turned outright hostile to the large outside investors<\/a> and proxy advisory firms<\/a> that sometimes oppose controlling shareholders\u2019 plans.<\/p>\n

\u201cCorporate governance authoritarianism\u201d is what Tulane University law professor Anne Lipton recently dubbed<\/a> this phenomenon. Such a trend invites backlash, although it will probably\u00a0take a sustained market downturn for the opposition\u00a0to really get going. The voting-shares provision of\u00a0the 2026 Billionaire Tax Act may be\u00a0an early, possibly inadvertent and definitely counterproductive precursor of the reaction to come.<\/p>\n

To contact the author of this story:
Justin Fox\u00a0at [email\u00a0protected]<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"(Bloomberg Opinion) — An underappreciated aspect of the one-time 5% billionaire wealth tax likely to go before\u00a0California voters…\n","protected":false},"author":2,"featured_media":59793,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[165],"tags":[614],"class_list":{"0":"post-59792","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-sergey-brin","8":"tag-sergey-brin"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@people\/116528956203377498","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/59792","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/comments?post=59792"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/posts\/59792\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media\/59793"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/media?parent=59792"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/categories?post=59792"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/people\/wp-json\/wp\/v2\/tags?post=59792"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}