The recent proposal by Rep. Ro Khanna for a wealth tax in California is causing significant reactions among the state's billionaires, particularly those in Silicon Valley. This tax plan aims to impose a one-time 5% tax on approximately 180 billionaires to support healthcare for the working class.
• Wealth Tax Proposal: Initially suggested by the SEIU, the tax has faced opposition from California Governor Gavin Newsom but support from Rep. Khanna.
• Billionaires' Response: Many billionaires are beginning to leave California in anticipation of the wealth tax. Google co-founders Larry Page and Sergey Brin have started moving their business interests out of the state.
• Company Relocation: Brin terminated or transferred 15 California businesses to Nevada, while Page is also reducing his presence in California, highlighted by a recent property purchase in Miami.
• Impact on California Budget: With prominent billionaires like Peter Thiel, Larry Ellison, and David Sacks already relocating, there is a growing concern about the state's budget deficit if top earners exit due to the new tax.
• Economic Implications: Chamath Palihapitiya, a venture capitalist, noted that many wealthy individuals have already left California, which could exacerbate the financial issues within the state and lead to either increased borrowing or higher taxes for residents.
The proposed wealth tax is prompting notable individuals to reconsider their ties to California, raising questions about the future financial stability of the state. If wealthy taxpayers continue to relocate, California may face an even larger budget shortfall, regardless of whether the tax is implemented.
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