Democratic Rep. Ro Khanna has introduced a wealth tax in his home state of California, and his longtime allies in Silicon Valley are now threatening to abandon him.
California labor groups are trying to put a proposed statewide tax on millionaires on the November ballot. The proposal has caused a rift among Democrats, with some in the tech industry furious, threatening to leave the state if the bill is adopted.
Khanna responded to the possibility of leaving the country in a social media post last week, saying he echoed President Franklin Delano Roosevelt’s comment that “I’m going to miss you so much” when economic royalists threatened to leave the country.
The post not only sparked criticism from technology leaders, but also calls for Khanna to become the party’s leading party.
“Mr. Roe has gone on a rampage that has alienated all the moderates I know who have supported him, myself included,” Martin Casado, a partner at venture capital firm Andreessen Horowitz, wrote in a post on X. “At least that makes it all the more enjoyable to vote for him.”
“It’s time to make him primary,” wrote Garry Tan, CEO of startup accelerator Y Combinator.
Recent campaign finance disclosures show that among the biggest donors to Mr. Khanna’s Congressional Campaign Committee are associates of Andreessen Horowitz and Y Combinator.
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 help offset the state’s projected health budget shortfall.
If the measure gathers enough signatures to qualify for the ballot, California voters will decide whether to implement the tax, which would be retroactive to January 1, 2026.
A key reason tech investors, business owners, and entrepreneurs have banded together and vocally opposed the tax is their fear that it would be applied to unrealized gains. 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.
“We absolutely need to understand how society adapts to the rapidly growing wealth gap,” Reddit co-founder and venture investor Alexis Ohanian said in a post on Sunday. “But the answer is definitely not to tax unrealized gains.”
California Governor Gavin Newsom attends the United Nations Climate Change Conference (COP30) in Belem, Brazil, November 11, 2025.
Adriano Machado | Reuters
Democratic California Governor Gavin Newsom, who is widely considered a potential 2028 presidential candidate, opposes a state-level billionaire tax.
“You can’t isolate yourself from 49 (other) states,” Newsom said at the New York Times’ Dealbook conference earlier this month. “You have to be realistic about it.”
But public opinion polls have repeatedly shown widespread support for the idea, and pressure is mounting nationally on Democrats to support taxes on the wealthy. A Pew Research Center poll earlier this year found that 58% of all Americans support raising taxes on people making more than $400,000 a year. Among Democrats surveyed, 74% supported tax increases.
Meanwhile, Republicans are gaining traction in Silicon Valley, home to tech billionaires who traditionally lean Democratic.
This year, tech company CEOs flocked to the White House to curry favor with President Donald Trump, who has placed tech leaders in roles within his administration.
Mr. Khanna won California’s 17th Congressional District by more than 30 points in 2024. It is highly unlikely that the deep blue seat will go to Republicans in 2026.
In a follow-up post on X, Khanna reiterated his support for a wealth tax.
“Yes, we need entrepreneurs to commercialize disruptive innovations,” Khanna said. “But the idea that if they were taxed 1 to 2 percent on their incredible wealth, they wouldn’t start companies or take advantage of innovation clusters to make billions defies common sense and economic theory.”
Vinod Khosla, founder of Sun Microsystems and Khosla Ventures, who has a net worth of about $12.6 billion according to Forbes, disagreed with Khanna and said billionaires would leave the state.
“You’re so wrong, Ro,” Khosla said in a post to X. “A strong candidate who creates wealth in the state will almost certainly leave the state. Any advisor to a company with significant momentum will advise moving key personnel to another state.”
Rep. Khanna’s spokeswoman Sarah Droley told CNBC that the congressman is “a passionate supporter of technology and entrepreneurship,” noting that he co-authored the CHIPS and Science Act, a federal program aimed at boosting domestic semiconductor manufacturing.
“He has always supported a modest wealth tax on billionaires to address staggering inequality and ensure people have access to health care,” Dolly wrote. “He advocates common-sense workarounds for startup founders whose companies are not profitable and who own illiquid stock.”
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