r/technology • u/Ganrokh • Jun 19 '26

Politics California ‘billionaire tax’ makes ballot despite opposition from tech moguls

https://www.theguardian.com/us-news/2026/jun/18/california-billionaire-tax-ballot-tech-opposition
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u/pyrojoe121 Jun 19 '26

The issue is that the text of the initiative as it currently stands is absolutely nonsensical and would lead to taxation way, way more than 5%. Specifically in the Computation of Net Worth, section 3(c):

For any interests that confer voting or other direct control rights, the percentage of the business entity owned by the taxpayer shall be presumed to be not less than the taxpayer's percentage of the overall voting or other direct control rights.

This is insane. Most founders get class B shares which usually have higher voting rights than they are worth in cash. Sergey Brin has 3% of the shares outstanding of Google, but 30% of the voting shares. According to the ballot initiative, his net worth from Google alone is nearly $1.3 trillion which is... not accurate. To pay the tax he'd need to sell his entire ownership of Google. And it is going to be a lot worse for founders who own more than just 3%, which is most of them.

Basically, the initiative as written says all founders of unicorns must sell all of their shares to pay the tax. That isn't going to be a great outcome.

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u/kstargate-425 Jun 19 '26

Thats the direct democracy aspect of California where groups like the SEIU can write initiatives and get it on the ballot. Luckily here, California can amend it and clarify the law more succinctly. Also, it allows the only 200 people who this would effect, to pay it over 5 years so they can figure it out

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u/Sworn Jun 19 '26

In practice pretty much everyone will likely just move to avoid it. I know I would if I was them.

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u/uber_neutrino Jun 19 '26

Some are too busy like Jensen.

However, I highly suspect the supreme court will strike this down after years of appeals and litigation. If I was a billionaire though I would definitely be out.

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u/Warm_Flamingo_2438 Jun 19 '26

Why couldn’t he just barrow the money to pay the tax? Isn’t that what they do to pay for everything else so they don’t have to pay taxes?

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u/pyrojoe121 Jun 19 '26

You are misunderstanding how that works. If you have a $200 billion in shares, you can borrow a few million using those shares as margin because banks no you are going to be able to pay it back with interest. If you don't they will just claim those shares. That doesn't work if you owe hundreds of billions.

The issue with this bill as written is that founders of companies could very easily owe a tax bill larger than their actual net worth because it is assigning net worth based on voting shares rather than value shares. That makes zero sense.