Full Breakdown
Mark Cuban and Rep. Ro Khanna Clash Over California Billionaire Wealth Tax
8/18/2026, 8:19:07 AM
The Proposed Wealth Tax
Rep. Ro Khanna is championing Proposition 40, a ballot measure that would levy a one-time tax of up to 5 percent on the assets of people and trusts holding more than $1 billion.
Background & Context
California is home to “hundreds of billionaires” whose wealth is largely tied up in stocks, businesses and other illiquid assets. The Legislative Analyst’s Office notes that 72 percent of billionaire wealth is held in public stock, making a wealth tax distinct from an income tax. Six billionaires have already changed their residency before the January 1 deadline to avoid the tax.
Official Statements & Responses
To address founders with illiquid holdings, Khanna proposed a non-recourse loan: founders could pledge shares to the state, receive a loan to pay the tax, and either repay in cash or have the state assume the shares after up to ten years.
Cuban counters that the measure misunderstands startup wealth. He points out that founders of “10 b-dollar startups” often become paper billionaires while holding little cash, and that forcing them to sell or borrow against shares would jeopardize company growth.
Data & Statistics
- Targeted group: 250 California billionaires.
- Tax rate: up to 5 percent on assets exceeding $1 billion.
- Wealth composition: 72 percent in public stock; many are “cash poor, stock rich.”
- Expected revenue: tens of billions over several years; 90 percent for health care.
- Residency changes: six billionaires left California before the January 1 deadline.
Verbatim Quotes
- “The California Democratic Party and the California Labor Movement just stood with Bernie Sanders and me in supporting a five percent wealth tax on 250 California billionaires,” — Rep. Ro Khanna
- “A unique feature of these 10b startups is that even if they raise a billion, little, if any of that money goes to the founders, who are now worth billions of dollars overnight,” — Mark Cuban
- “How are you going to tax them?” — Mark Cuban
- “If this passes, only idiot startup founders stay in Cali,” — Mark Cuban
- “The government would still collect from the vast majority of billionaires who are not illiquid,” — Rep. Ro Khanna
- “Most say, I promise you, why only 5 percent?” — Rep. Ro Khanna
