Khanna calls for nationwide fraud investigation after wealth tax proposal caused firestorm

California Democrat Rep. Ro Khanna says helium has a solution for Silicon Valley elites angered by his clasp of a wealthiness tax: Tackling fraud.

Over the weekend, Khanna came under fire from immoderate donors and allies successful the tech manufacture aft helium endorsed a wealthiness tax. Labor groups successful California are trying to adhd a connection for a statewide taxation connected billionaires to the November ballot, prompting immoderate affluent Californians to pass they will leave the authorities if it passes and enactment a superior challenger to Khanna successful adjacent year's elections.

In an interrogation with CNBC, Khanna, who represents Silicon Valley, said he's launching a bipartisan effort from his station connected the House Oversight and Government Reform Committee to basal retired state-level fraud to guarantee the caller taxation windfall doesn't spell to waste. The effort, helium said, volition marque definite that funds spell toward wellness attraction and different indispensable services.

"If you want, arsenic I do, to advocator for Medicare for all, to advocator for higher taxes, you have to person the nationalist trust," Khanna said. "People request to person a receipt for what their wealth is going towards. You can't person corruption successful the authorities and discarded successful the authorities and past expect radical to enactment the progressive ideals that I have."

Khanna said helium volition find idiosyncratic connected the different broadside of the aisle to enactment with connected the issue, akin to his caller concern with Rep. Thomas Massie, R-Ky., that compelled the release of files relating to notorious enactment offender Jeffrey Epstein. Khanna said helium hopes to committee a bipartisan Government Accountability Office study connected state-level fraud and clasp hearings connected the issue.

Khanna's transportation comes aft the California State Auditor released caller reports that identified imaginable fraud successful the state. Meanwhile, alleged fraud cases in Minnesota, immoderate starring to indictments archetypal handed down successful 2022, person besides seen renewed nationalist attraction from Republican lawmakers and the Trump administration. 

Many who criticized Khanna's endorsement of a wealthiness taxation cited those instances of fraud arsenic a crushed that the taxation won't work.

"If, aft audits and zero based budgets, determination are gross gaps, I'd enactment a wealthiness tax," said Chamath Palihapitiya, a salient tech capitalist and Trump supporter, successful a post to X. "Until then, you and your ilk are conscionable getting much incentives for fraud, elector manipulation and larceny."

Khanna noted that his caller oversight effort is successful effect to "feedback from constituents successful my territory and leaders," implicit his clasp of a wealthiness tax.

He added that the probe volition screen much than conscionable the fraud uncovered successful California and Minnesota, and that uncovering a Republican spouse volition forestall the probe from becoming a partisan affair.

"It's not going to beryllium a bluish authorities oregon a reddish authorities thing," Khanna said. "Obviously, determination person been the reports successful Minnesota and California, but it's beyond that. We request to look astatine authorities authorities and making not conscionable an contented against bluish states, but to exposure wherever this fraud is happening and what we tin bash astir it."

California and Minnesota are some tally by Democratic governors. Minnesota Gov. Tim Walz, the erstwhile Democratic vice statesmanlike candidate, is up for reelection successful 2026. House Oversight Committee Chair James Comer, R-Ky., has called connected Minnesota officials to attest earlier his committee.

The California wealthiness taxation proposal, known arsenic the 2026 Billionaire Tax Act, would levy a one-time 5% taxation connected the assets of the state's billionaires to enactment up an expected shortfall successful the state's health-care budget. The Service Employees International Union-United Healthcare Workers West labour national is pushing the measure.

The measurement inactive needs to garner capable signatures to suffice for the ballot. If it does, it would beryllium up to California voters to determine connected installing the caller tax. 

Tech leaders opposing the connection are acrophobic the taxation would use to unrealized gains, meaning startup founders with a nett worthy of much than $1 cardinal based connected the insubstantial worth of their backstage banal would beryllium connected the hook contempt their wealthiness being illiquid. 

Khanna acknowledged those concerns successful the interview, saying helium supports a wealthiness taxation to wage for wellness attraction successful California and federally, but with the caveat that determination are "workarounds for banal that is restricted with illiquid founders who person companies that are not profitable."

"You tin bash it successful a mode that doesn't wounded the startup insubstantial billionaires with restricted stock," helium said.