Democratic San Jose Mayor Matt Mahan opposes billionaire tax

The Democratic mayor of San Jose, California, has voiced opposition to a statewide ballot measure asking voters to approve a one-time 5% tax on billionaires’ net worth.

Matt Mahan, who takes over as Silicon Valley’s largest city in 2023, said in a series of X posts on Monday that the initiative would ultimately come at the expense of the majority of Californians.

“What we need is a rising economic tide that lifts all boats, not a political agenda that sinks California’s innovation economy,” Mahan wrote.

The U.S. Census Bureau estimates San Jose’s population will be just under 1 million by mid-2024. It is the third largest city in California after Los Angeles and San Diego.

Tech investors and executives have recently spoken out against taxing billionaires, arguing that it would lead to companies and entrepreneurs fleeing to other states. The issue has been particularly contentious for Democratic Rep. Ro Khanna, whose district includes parts of Silicon Valley, as former allies in the tech industry have threatened to defend the primary challenger.

“Even those who don’t expect this initiative to pass are still planning to leave because another initiative will be discussed,” billionaire investor Vinod Khosla wrote in X magazine late last month. “And California will lose its most important taxpayer, and its net income will suffer even more.”

David Sachs, the venture capitalist who is now President Donald Trump’s cryptocurrency and artificial intelligence czar, told X last week that “Austin is going to be the tech hub that replaces science fiction.” The New York Times reported that tech investor Peter Thiel and Google co-founder Larry Page are considering leaving the company.

“While kicking billionaires out of the state may be good in the short term, workers will (as they almost always do) end up paying the price for this political maneuver,” Mahan wrote Monday. “The people who will lose in the long run are California families who will be asked to pay more for government services and infrastructure.”

Mahan said addressing income inequality requires solutions such as “nationally closing massive loopholes that allow the wealthiest among us to essentially avoid paying taxes on many capital gains.”

The ballot measure, called the “Millionaire Tax Act of 2026,” is being promoted by the International Federation of Service Employees and the Western Federation of Health Care Workers Unions. If passed, it would impose a one-time 5% tax on the assets of California billionaires to make up for an anticipated shortfall in the state’s health care budget.

If the measure gathers enough signatures to qualify, California voters will decide whether to implement the tax, which would be retroactive to January 1, 2026. In California, the measure will need about 875,000 signatures before it can appear on the ballot.

The tax could raise $100 billion by 2031 from the state’s 200 wealthiest people, according to a report from some of the bill’s authors. California’s population was more than 39 million at the beginning of 2025, according to state data.

The main reason tech investors and executives are banding together to oppose the initiative is fear that unrealized gains will be taxed. That means startup founders with a net worth of more than $1 billion based on the paper value of private equity will have to pay taxes on those assets, even if they are illiquid.

Rep. Khanna’s spokeswoman Sarah Drory told CNBC in late December that Khanna supports “a modest wealth tax on billionaires to address staggering inequalities and ensure people have access to health care,” but also advocates for “common sense workarounds for startup founders holding unprofitable and illiquid stocks.”

—CNBC’s Garrett Downs contributed to this report.

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