Why Tech Leaders Like David Sacks Are Fighting California's Wealth Tax on Founders

When Silicon Valley’s wealthiest entrepreneurs gathered in a Signal chat group called “Save California,” they weren’t just reacting to a 5% tax on billionaires. The real trigger was far more complex—and it’s reshaping how tech founders view their home state. The wealth tax proposal targets company founders based on their voting shares rather than actual ownership stakes, a distinction that could cost even moderately successful entrepreneurs their entire equity position.

The Real Problem: Taxing Voting Control, Not Actual Ownership

The mechanics of California’s proposed wealth tax reveal why the backlash extends beyond simple tax avoidance concerns. Consider Larry Page’s situation: while he owns approximately 3% of Google, his dual-class stock arrangement gives him command over nearly 30% of voting rights. Under the new proposal, his tax burden would be calculated on that 30% figure—an astronomical sum given Google’s market capitalization.

The implications for younger founders are even more severe. According to reporting on the initiative, an early SpaceX employee transitioning to a grid technology startup could face a complete tax wipeout of their equity stake during Series B fundraising rounds, before the company has even achieved meaningful liquidity.

Silicon Valley’s David Sacks Leads Opposition Through Save California Movement

Opposition to the proposal has unified an unlikely coalition. David Sacks, the prominent crypto advocate and venture investor, joined forces with Chris Larsen and other major players to coordinate resistance. What began as individual skepticism evolved into organized resistance through the “Save California” chat channel, demonstrating how quickly the tech community mobilizes when founder equity valuations come under threat.

The movement isn’t purely defensive posturing. Founders like Larry Page have already begun relocating, with reports of $173.4 million in Miami real estate purchases. Peter Thiel’s company made a deliberate office lease announcement in Miami last month, sending what industry observers read as a calculated political statement about founder geography preferences.

Why Even Alternative Valuations Won’t Solve Founders’ Tax Burden

David Gamage, a University of Missouri law professor and one of the proposal’s architects, argues that concerns are overstated. He maintains that founders could defer taxes until eventual liquidity events and could commission independent appraisals to establish fair market value rather than rely on voting-control calculations.

However, this solution contains significant practical pitfalls. Tax specialist Jared Walczak points out that private company valuation remains “inherently difficult,” with honest disagreements commonplace. If California’s tax authorities dispute an founder’s independent valuation, both the company and the appraiser face potential penalties. Founders remain exposed to substantial tax obligations on company control they hold but wealth they haven’t yet realized—a distinction that creates genuine financial jeopardy even for companies destined to succeed.

Governor Newsom Joins the Fight Against the $100 Billion Proposal

The political landscape surrounding the measure has shifted beyond Silicon Valley activism. California Governor Gavin Newsom announced his active opposition to the initiative, telling the New York Times, “This will be defeated, there’s no question in my mind,” while emphasizing his behind-the-scenes efforts to block it.

The underlying proposal, championed by California’s largest health care union, would impose a one-time 5% wealth tax on individuals exceeding $1 billion in net worth. The union argues the revenue—targeting approximately $100 billion from roughly 200 ultra-wealthy residents—is essential to offset recent federal health care funding reductions, including Medicaid and ACA subsidy cuts. The tax would apply retroactively to anyone residing in California as of January 1, 2026.

The Path to the Ballot and Beyond

For the initiative to reach November’s ballot, organizers must collect 875,000 signatures—a challenging but historically achievable threshold. The proposal requires only a simple majority to pass. Yet despite union organizer Debru Carthan’s assertion that “our goal is simply to keep emergency rooms open and save lives,” mounting opposition from figures like David Sacks suggests the measure faces formidable headwinds.

The debate ultimately reflects a fundamental tension: whether California can retain its ultra-wealthy founder class while implementing aggressive wealth redistribution policies. So far, the tech community’s answer—expressed through both organizing efforts and relocation announcements—suggests the state may be facing an exodus that extends far beyond tax rate calculations.