The political peril of California’s billionaire tax

[Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.]

Silicon Valley’s congressman is facing backlash from some of his wealthiest constituents after endorsing a proposed wealth tax on California billionaires. The fight reflects a larger debate over income inequality, especially as artificial intelligence creates new fortunes while threatening jobs for many workers.

Rep. Ro Khanna has backed a ballot measure that would impose a one time 5% tax on billionaires living in California. The tax would be due in 2027, with payments allowed over several years, and most of the money would go toward health care. The proposal was written by labor unions and is opposed by Governor Gavin Newsom.

Khanna’s support triggered sharp criticism from tech founders and investors, some of whom are considering funding a challenger. Beyond concerns about higher taxes, critics question how the policy would work, since it could apply to unrealized gains rather than actual income. That would be a major shift in tax policy.

Khanna says he wants to protect innovation while making sure working people share in the state’s prosperity. He believes a modest reduction in inequality could improve access to health care, but the challenge is finding a workable approach that does not drive away support or investment.

For more information see Dan Primack “The political peril of California’s billionaire tax,” Axios, January 5, 2026.