Has California lost Larry Page? The Google and Alphabet co-founder, who left the day-to-day business in 2019, has since seen his net worth skyrocket, from about $50 billion when he left to about $260 billion today. (Leaving his job apparently didn’t hurt his wallet.) Last year, a proposed ballot initiative in California threatened billionaires like Page with a one-time 5 percent wealth tax, prompting some of them to consider leaving the state before the end of the year when the tax, if passed, would go into effect retroactively. Page appears to be one of those fugitives; He recently spent more than $170 million on two homes in Miami, according to the Wall Street Journal. The article also indicated that its co-founder Sergey Brin may also become a Florida resident.
Google employees, formerly California icons, are just two of about 250 billionaires covered by the plan. It is uncertain whether many of them went to Florida, Texas, Fresh Zealand or the space station. But it’s clear that many high-profile billionaires and other super-rich people are publicly losing their minds about the proposal, which will appear on the November ballot if it collects about 875,000 signatures. hedge fund magnate Bill Ackman calls it “catastrophic.” Elon Musk, the richest man in the world, boasted that he already pays a lot of taxes, so much so that one year he collected his tax return broke the IRS computer.
But even the vast sums paid by some billionaires are well below the tax rates that many teachers, accountants and plumbers pay each year, based on a percentage of their income. If Musk, whose fortune is now estimated at $716 billion, had to pay a 5 percent estate tax, he would probably be able to live on $680 billion in savings – enough to buy Ford, General Motors, Toyota and Mercedes and Still remain the richest person in the world. (At least it’s protected from California taxes; a few years ago moved to Texas.)
California politicians, including Gov. Gavin Newsom, agree generally the opposite to the initiative. A glaring exception is Rep. Ro Khanna, who in a statement to WIRED said he supports “a modest wealth tax on billionaires to deal with staggering inequality and provide people with health care.”
Khanna may pay a price for fighting the wealthy and may face it a major challenge backed by oligarchs for this reason. Taking a safer stance for Bay Area politicians is San Jose Mayor Matt Mahan. He recently tweeted his opposition to the bill, saying that if California passes a wealth tax, he’ll cut off his nose to spite her. When I talk to Mahan, he emphasizes the risk that California will be alone in taxing billionaires’ net worth. “This threatens our innovation economy, which is the real engine of economic growth and opportunity,” he says. (Mahan is not super wealthy, but he is close to a billionaire: he was once a CEO business co-founder was former Facebook CEO Sean Parker.)
Because of the mobility of wealthy people, California is really worried about the impact of the state wealth tax. Since I’m not a billionaire myself, this idea is surprising to me – leaving your perfect home simply to avoid a tax that has no bearing on your living situation seems, to apply Mahan’s words, like cutting off your nose to spite your face.
I also don’t understand why the exodus of billionaires necessarily means the end of Silicon Valley as the heart of tech innovation. If you want become billionaire, there is no better place than the Bay Area with an ecosystem that fosters creative enterprises. This doesn’t change. A few years ago, some techies moved to Miami, saying it would become the up-to-date Silicon Valley. This it didn’t happen.