Wealth Tax Debate in California

On Thursday, left-leaning podcaster Kara Swisher expressed her views on billionaires who have left California in response to a proposed wealth tax. She labeled them as “ungrateful,” suggesting they should find a way to contribute to the tax instead.

This proposed measure, which would impose a one-time 5% tax on billionaires, has been opposed by several Democratic candidates for governor and California’s Governor Gavin Newsom. In an episode of her podcast, “On with Kara Swisher,” Swisher shared her comments with Democratic Representative Ro Khanna from California regarding an opponent of the tax initiative.

Swisher remarked, “It specifically targets about a hundred individuals, I think, who are considering leaving California, except for Jensen Hong, who seems to be staying. I am of two minds about this. On one hand, you’ve earned your wealth in California. It’s a bit ungrateful to think you can just walk away. You could figure out a way to pay more taxes, and frankly, we deserve that contribution from you since you built your wealth here.”

Khanna, who supports a wealth tax, pointed out potential constitutional challenges related to such measures. He expressed, “I think it should be at the federal level. There are constitutional issues regarding revenue burdening particular states disproportionately. The 16th Amendment allows for income tax. However, it’s uncertain how the constitutionality of a wealth tax would be determined. While I believe it could be constitutional, advocating it federally would simplify administration.”

He elaborated that, if implemented at the state level, a preferential approach might involve taxing loans on estates by perhaps 1% annually on public stock.

During the 2024 presidential campaign, former Vice President Kamala Harris had advocated for taxing unrealized capital gains at a 25% rate for individuals worth $100 million or more. This proposal echoed a suggestion from the Biden administration outlined in a March 2024 fact sheet. Khanna criticized this idea during a September 2024 appearance on CNBC, claiming it could negatively impact startups by forcing them to sell to private equity firms.

“This approach isn’t optimal,” Khanna stated, “since 95% of startup investments fail, such a tax would likely deter future investments in those ventures.”