Why Silicon Valley is really talking about fleeing California (it's not the 5%)

Silicon Valley is abuzz with concerns about fleeing California, but it's not the 5% wealth tax that's driving the nervousness. According to a recent article in the New York Post, the proposed wealth tax would hit founders on their voting shares rather than the actual equity they own. This means that even if a founder owns only 3% of their company, they could still be subject to the tax.

The article highlights the case of Larry Page, who owns about 3% of Alphabet, the parent company of Google. If the proposed wealth tax were to pass, Page could be subject to the tax on his voting shares, even if he doesn't own a significant portion of the company.

This has sparked concerns among Silicon Valley executives, who are worried about the impact of the tax on their businesses. Some have even considered fleeing California altogether, citing the high cost of living and the potential for increased taxes.

The proposed wealth tax is part of a larger package of tax reforms being proposed by the California state government. While the tax is intended to raise revenue for the state, it could have unintended consequences for the tech industry.

As one executive noted, the tax could make it more difficult for companies to attract top talent, as employees may be hesitant to relocate to California if they know they'll be subject to the tax. This could have a ripple effect throughout the industry, as companies may struggle to find qualified workers.

The debate over the proposed wealth tax is ongoing, with some arguing that it's necessary to raise revenue for the state, while others claim it's a misguided attempt to tax the rich. Whatever the outcome, one thing is clear: the tech industry is watching the situation closely, and any changes to the tax code could have significant implications for the industry as a whole.

Sources

[2] Why Silicon Valley is really talking about fleeing California (it’s not the 5%)