California's Ro Khanna faces Silicon Valley backlash after embracing wealth tax

Democrat Rep. Ro Khanna has embraced a wealthiness taxation successful his location authorities of California, and his longtime allies successful Silicon Valley are present threatening to wantonness him.

California labour groups are trying to adhd a connection for a statewide taxation connected billionaires to the November ballot. The connection is causing a rift among Democrats and enraging immoderate successful the tech community, who pass they will leave the authorities if the measurement is adopted. 

Khanna past week reacted to the imaginable exodus successful a societal media post, saying helium echoes what President Franklin Delano Roosevelt said with "sarcasm of economical royalists erstwhile they threatened to leave, 'I volition miss them precise much.'"

The station prompted not lone disapproval from tech leaders but besides calls for Khanna to beryllium primaried. 

"Ro has done a velocity tally alienating each mean I cognize who has supported him. Including myself," wrote Martin Casado, a spouse astatine task superior steadfast Andreessen Horowitz, successful a post connected X. "At slightest that makes voting him the f--- retired each the much gratifying."  

Garry Tan, CEO of startup accelerator Y Combinator, wrote it's "Time to superior him."

Associates of Andreessen Horowitz and Y Combinator are among the apical donors to Khanna's legislature run committee, according to caller run finance disclosures.

The projected ballot measure, dubbed the 2026 Billionaire Tax Act, is being pushed by the Service Employees International Union-United Healthcare Workers West labour union. If enacted, it would levy a one-time 5% taxation connected the assets of California billionaires to enactment up an expected shortfall successful the state's healthcare budget. 

Should the measurement garner capable signatures to suffice for the ballot, it volition beryllium up to California voters to determine whether instrumentality the tax, which would beryllium retroactive to Jan. 1, 2026. 

A large crushed that tech investors, executives and entrepreneurs are agreed successful vocal absorption is the interest that the taxation would use to unrealized gains. That means that startup founders with a nett worthy of implicit $1 cardinal based connected the insubstantial worth of their backstage banal would person to wage taxation connected their wealthiness adjacent though it's illiquid.

"We're perfectly going to person to fig retired however our nine adapts to a rapidly expanding wealthiness gap," wrote Reddit co-founder and task capitalist Alexis Ohanian, successful a post connected Sunday. "But the reply is decidedly not taxing unrealized gains."

Democratic California Gov. Gavin Newsom, who is wide considered a contender for the presidency successful 2028, opposes state-level billionaire taxes.

"You can't isolate yourself from the 49 [other states]," Newsom said astatine the New York Times Dealbook conference earlier this month. "You've gotta beryllium pragmatic astir it."

But unit is increasing nationally for Democrats to backmost efforts to taxation the wealthy, arsenic polls repeatedly amusement wide enactment for the idea. A Pew Research Center poll earlier this twelvemonth recovered that 58% of each Americans enactment raising taxes connected those making much than $400,000. Among the Democrats surveyed, 74% supported the higher taxes. 

Republicans, meanwhile, person been making expanding inroads successful Silicon Valley, location to a fig of tech billionaires who person traditionally leaned Democratic.

Tech CEOs this twelvemonth person flocked to the White House to curry the favour of President Donald Trump, who has placed tech leaders in roles wrong his administration.

Khanna carried California's 17th Congressional District by much than 30 points successful 2024. The heavy bluish spot would beryllium highly improbable to flip to Republicans successful 2026.

In a follow-up station connected X, Khanna restated his enactment for a wealthiness tax. 

"Yes, we request entrepreneurs to commercialize disruptive innovation," Khanna said. "But the thought that they would not commencement companies to marque billions, oregon instrumentality vantage of an innovation cluster, if determination is simply a 1-2 percent taxation connected their staggering wealthiness defies communal consciousness and economical theory."

Vinod Khosla, the laminitis of Sun Microsystems and Khosla Ventures who boasts a nett worthy of astir $12.6 cardinal according to Forbes, disagreed with Khanna and said the billionaires volition permission the state. 

"You are truthful incorrect Ro," Khosla said successful a post to X. "Top prospects for generating wealthiness successful the authorities volition astir surely permission the state. Every advisor would counsel each endeavor that gets large momentum to person cardinal radical relocate to different state." 

Sarah Drory, a spokesperson for Rep. Khanna, told CNBC successful a connection that the congressman is simply a "passionate protagonist of exertion and entrepreneurship," noting that helium co-wrote the CHIPS and Science Act, a national programme designed to boost home semiconductor manufacturing.

"He has ever supported a humble wealthiness taxation connected billionaires to woody with staggering inequality and to marque definite radical person healthcare," Drory wrote. "He has advocated for communal consciousness workarounds for startup founders whose companies are not profitable and who person illiquid stock."

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