A proposed ballot initiative in California, known as the "2026 Billionaire Tax Act," is causing significant concern among the state's wealthiest residents, particularly in the tech sector. The measure would impose a one-time 5% tax on net worth exceeding $1 billion, including unrealized gains on assets like stocks and private equity. The proposal is notable for its retroactive application, which would apply to anyone who was a California resident on January 1, 2026, regardless of when the measure might pass.
The nervousness in Silicon Valley is intensified by a provision that could value a founder's stake based on their voting control rather than their actual economic ownership. For founders with dual-class shares, this could dramatically inflate their taxable net worth, potentially forcing them to sell large portions of their stock and risk losing control of their companies. In response to the proposal, some high-profile tech figures, including Google co-founder Larry Page, have reportedly already begun moving business entities out of the state, fueling fears of a broader capital and talent exodus that could impact California's innovation ecosystem.