Democrat Rep. Ro Khanna has embraced a wealth tax in his residence state of California, and his longtime allies in Silicon Valley are actually threatening to desert him.
California labor teams try 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 neighborhood, who warn they will go away the state if the measure is adopted.
Khanna final week reacted to the potential exodus in a social media submit, saying he echoes what President Franklin Delano Roosevelt stated with “sarcasm of financial royalists after they threatened to go away, ‘I’ll miss them very a lot.'”
The submit prompted not solely criticism from tech leaders but in addition requires Khanna to be primaried.
“Ro has executed a pace run alienating each average I do know who has supported him. Together with myself,” wrote Martin Casado, a companion at enterprise capital agency Andreessen Horowitz, in a submit on X. “At the very 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 keeping with current marketing campaign finance disclosures.
The proposed poll measure, dubbed the 2026 Billionaire Tax Act, is being pushed by the Service Staff Worldwide Union-United Healthcare Employees West labor union. If enacted, it might levy a one-time 5% tax on the belongings of California billionaires to shore up an anticipated shortfall within the state’s health-care finances.
Ought to the measure garner sufficient signatures to qualify for the poll, it will likely 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 motive that tech buyers, executives and entrepreneurs are united in vocal opposition is the priority that the tax would apply to unrealized good points. That signifies that startup founders with a internet 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 submit on Sunday. “However the reply is unquestionably not taxing unrealized good points.”
Sarah Drory, a spokesperson for Rep. Khanna, informed CNBC in an announcement that the congressman is a “passionate supporter of expertise 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 take care of staggering inequality and to verify folks have well being care,” he additionally advocates “for commonsense workarounds for startup founders whose corporations are usually not 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 of a contender for the presidency in 2028, opposes state-level billionaire taxes.
“You possibly can’t isolate your self from the 49 [other states],” Newsom stated on the New York Instances Dealbook convention earlier this month. “You’ve got gotta be pragmatic about it.”
However strain is rising nationally for Democrats to again efforts to tax the rich, as polls repeatedly present extensive assist for the thought. A Pew Analysis Heart 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, residence to numerous 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 could be extremely unlikely to flip to Republicans in 2026.
In a follow-up submit on X, Khanna restated his assist for a wealth tax.
“Sure, we want entrepreneurs to commercialize disruptive innovation,” Khanna stated. “However the concept they might not begin corporations to make billions, or benefit from an innovation cluster, if there’s a 1-2 % tax on their staggering wealth defies widespread sense and financial idea.”
Vinod Khosla, the founding father of Solar Microsystems and Khosla Ventures who boasts a internet value of about $12.6 billion in keeping with Forbes, disagreed with Khanna and stated the billionaires will go away the state.
“You might be so mistaken Ro,” Khosla stated in a submit on X. “High prospects for producing wealth within the state will virtually definitely go away the state. Each advisor would advise each enterprise that will get massive momentum to have key folks relocate to a different state.”
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