Democrat Rep. Ro Khanna has embraced a wealth tax in his house state of California, and his longtime allies in Silicon Valley are actually threatening to desert him.
California labor teams are attempting so as to add a proposal for a statewide tax on billionaires to the November poll. The proposal is inflicting a rift amongst Democrats and enraging some within the tech group, who warn they will depart the state if the measure is adopted.
Khanna final week reacted to the potential exodus in a social media publish, saying he echoes what President Franklin Delano Roosevelt stated with “sarcasm of financial royalists once they threatened to go away, ‘I’ll miss them very a lot.'”
The publish prompted not solely criticism from tech leaders but additionally requires Khanna to be primaried.
“Ro has performed a pace run alienating each average I do know who has supported him. Together with myself,” wrote Martin Casado, a accomplice at enterprise capital agency Andreessen Horowitz, in a publish on X. “At the least that makes voting him the f— out all of the extra gratifying.”
Garry Tan, CEO of startup accelerator Y Combinator, wrote it is “Time to main him.”
Associates of Andreessen Horowitz and Y Combinator are among the many high donors to Khanna’s congressional marketing campaign committee, in accordance with current marketing campaign finance disclosures.
The proposed poll measure, dubbed the 2026 Billionaire Tax Act, is being pushed by the Service Workers Worldwide Union-United Healthcare Staff West labor union. If enacted, it could levy a one-time 5% tax on the property of California billionaires to shore up an anticipated shortfall within the state’s health-care price range.
Ought to the measure garner sufficient signatures to qualify for the poll, will probably be as much as California voters to determine whether or not to implement the tax, which might be retroactive to Jan. 1, 2026.
A serious purpose that tech buyers, executives and entrepreneurs are united in vocal opposition is the priority that the tax would apply to unrealized positive aspects. That signifies that startup founders with a web value of over $1 billion based mostly on the paper worth of their non-public inventory must pay tax on their wealth although it is illiquid.
“We’re completely going to have to determine how our society adapts to a quickly growing wealth hole,” wrote Reddit co-founder and enterprise investor Alexis Ohanian, in a publish on Sunday. “However the reply is certainly not taxing unrealized positive aspects.”
Sarah Drory, a spokesperson for Rep. Khanna, instructed CNBC in an announcement that the congressman is a “passionate supporter of know-how and entrepreneurship,” noting that he co-wrote the CHIPS and Science Act, a federal program designed to spice up home semiconductor manufacturing.
Drory stated that whereas Khanna helps a “modest wealth tax on billionaires to cope with staggering inequality and to ensure folks have well being care,” he additionally advocates “for commonsense workarounds for startup founders whose corporations will not be worthwhile and who’ve illiquid inventory.”
California Governor Gavin Newsom attends the UN Local weather Change Convention (COP30), in Belem, Brazil, Nov. 11, 2025.
Adriano Machado | Reuters
Democratic California Gov. Gavin Newsom, who’s broadly thought-about a contender for the presidency in 2028, opposes state-level billionaire taxes.
“You may’t isolate your self from the 49 [other states],” Newsom stated on the New York Occasions Dealbook convention earlier this month. “You’ve got gotta be pragmatic about it.”
However stress is rising nationally for Democrats to again efforts to tax the rich, as polls repeatedly present vast assist for the thought. A Pew Analysis Middle ballot earlier this 12 months discovered that 58% of these surveyed assist elevating taxes on these making greater than $400,000. Among the many Democrats surveyed, 74% supported the upper taxes.
Republicans, in the meantime, have been making growing inroads in Silicon Valley, house to a lot of tech billionaires who’ve historically leaned Democratic.
Tech CEOs this 12 months have flocked to the White Home to curry the favor of President Donald Trump, who has positioned tech leaders in roles inside his administration.
Khanna carried California’s seventeenth Congressional District by greater than 30 factors in 2024. The deep-blue seat can be extremely unlikely to flip to Republicans in 2026.
In a follow-up publish on X, Khanna restated his assist for a wealth tax.
“Sure, we’d like entrepreneurs to commercialize disruptive innovation,” Khanna stated. “However the concept they might not begin corporations to make billions, or reap the benefits of an innovation cluster, if there’s a 1-2 p.c tax on their staggering wealth defies widespread sense and financial concept.”
Vinod Khosla, the founding father of Solar Microsystems and Khosla Ventures who boasts a web value of about $12.6 billion in accordance with Forbes, disagreed with Khanna and stated the billionaires will depart the state.
“You might be so unsuitable Ro,” Khosla stated in a publish on X. “High prospects for producing wealth within the state will nearly definitely depart the state. Each advisor would advise each enterprise that will get huge momentum to have key folks relocate to a different state.”
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