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

The Democratic mayor of San Jose, California, has come out against a proposed statewide ballot measure that would ask voters to approve a one-time 5% tax on billionaires’ net worth.

Matt Mahan, who took office Silicon Valley’s biggest city in 2023, said in a series of X posts on Monday that the initiative would end up costing the majority of California residents.

“We need a rising economic tide to lift all boats, not a political plan that will sink California’s innovation economy,” Mahan wrote.

San Jose’s population sat just below 1 million as of mid-2024, according to a U.S. Census Bureau estimate. It’s the third-largest California city, behind Los Angeles and San Diego.

Tech investors and executives have been vocal of late in their opposition to a tax on billionaires, claiming that it will cause companies and entrepreneurs to flee for other states. The issue has become particularly contentious for Democratic Rep. Ro Khanna, whose district includes part of Silicon Valley, as one-time supporters in the tech industry have threatened to throw their weight behind a primary challenger.

“Even people who don’t expect this initiative to pass are still planning to leave because there will be another one is the argument,” billionaire investor Vinod Khosla wrote on X late last month. “And California will lose its most important tax payers and net off much worse.”

David Sacks, a venture capitalist now serving as President Donald Trump’s crypto and artificial intelligence czar, said on X last week that “Austin will replace SF as the tech capital.” Tech investor Peter Thiel and Google co-founder Larry Page, have considered leaving, The New York Times reported.

“Driving billionaires out of state might feel good in the short run but working people (as is almost always the case) will pick up the tab for this political ploy,” Mahan wrote on Monday. “The people who lose in the long run are California families who will be asked to foot more of the bill for government services and infrastructure.”

Mahan said that addressing income inequality requires solutions like “closing the massive loopholes nationally that allow the wealthiest among us to essentially never pay taxes on many capital gains.”

The proposed ballot measure, dubbed the 2026 Billionaire Tax Act, is being pushed by the Service Employees International Union-United Healthcare Workers West labor union. If enacted, it would levy a one-time 5% tax on the assets of California billionaires to shore up an expected shortfall in the state’s health-care budget. 

Should the measure garner enough signatures to qualify, it will be up to California voters to decide whether to implement the tax, which would be retroactive to Jan. 1, 2026. California will require around 875,000 signatures before placing the initiative on the ballot.

A report from some of those who drafted the measure said the tax could raise $100 billion through 2031 from the 200 wealthiest people in the state. California had over 39 million people at the start of 2025, according to state data.

A major reason that tech investors and executives are united in opposing the effort is the concern that the tax would apply to unrealized gains. That means startup founders with a net worth of over $1 billion based on the paper value of their private stock would have to pay tax on their wealth even though it’s illiquid.

Sarah Drory, a spokesperson for Rep. Khanna, told CNBC in late December that while Khanna supports a “modest wealth tax on billionaires to deal with staggering inequality and to make sure people have health care,” he also advocates “for commonsense workarounds for startup founders whose companies are not profitable and who have illiquid stock.”

— CNBC’s Garrett Downs contributed to this report.

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