Democratic mayor of Silicon Valley's largest city opposes billionaire tax

The mayor of San Jose, California, has voiced strong opposition to a proposed statewide initiative that seeks to introduce a one-time 5% tax on the net worth of billionaires. Matt Mahan, who began his term in 2023 as the leader of Silicon Valley's largest city, expressed his concerns through a series of posts on X, warning that the tax could negatively impact the majority of California residents. Mahan emphasized the need for economic growth that benefits all Californians, stating, "We need a rising economic tide to lift all boats, not a political plan that will sink California's innovation economy." San Jose, with a population nearing 1 million, ranks as the third-largest city in California, trailing only Los Angeles and San Diego. Tech investors and executives have recently rallied against the proposed tax, arguing that it may drive companies and entrepreneurs to relocate to more favorable states. This issue has also created tension for Democratic Representative Ro Khanna, who represents part of Silicon Valley, as former supporters in the tech industry consider backing a primary challenger. Billionaire investor Vinod Khosla articulated the fears of many by stating that even those who doubt the initiative's success are contemplating leaving, citing concerns over future tax proposals. He noted, "California will lose its most important tax payers and net off much worse." Venture capitalist David Sacks suggested that cities like Austin are poised to take over as the new tech hubs, indicating a shift in the industry landscape. The proposed 2026 Billionaire Tax Act is backed by the Service Employees International Union-United Healthcare Workers West, aiming to address a projected shortfall in California’s healthcare budget by imposing a tax on the wealthiest individuals. If the initiative gathers enough support—requiring approximately 875,000 signatures—it could be presented to voters, with a retroactive application starting January 1, 2026. Estimates indicate that the tax could generate around $100 billion by 2031 from the state's wealthiest individuals. A key point of contention among tech leaders is the tax's applicability to unrealized gains. This means that entrepreneurs with substantial paper wealth tied to their private businesses would face taxation despite their assets being illiquid. Khanna's office has acknowledged the need for a balanced approach, supporting a modest wealth tax while advocating for solutions that protect startup founders in challenging financial situations. In response to the proposed tax, Mahan cautioned that the burden of such measures often falls on working families, who may end up shouldering higher costs for government services and infrastructure. He urged for comprehensive reforms that address income inequality without driving away the very individuals who contribute significantly to the state's economy.