California’s Tech Industry Kill Switch

The California Innovation Drain has begun. And it’s not because billionaires are angry. It’s because staying means bankruptcy.

Late last year, the architects of California’s “Billionaire Wealth Tax” ballot proposition quietly amended language that, if successful, would permanently end founder-controlled startups in the state. This isn’t just a tax. It’s an execution.

The Kill Switch Hidden in Plain Sight

The November amendment changed everything. Buried in the fine print is a redefinition of “net worth” that treats voting control as ownership. Here’s the exact language:

What does that mean in practice? If you own 10% of a company worth $10 billion but have 10x voting rights, you’re now assessed as owning 100% of your company’s valuation. That’s a $500 million tax bill for someone whose actual equity is worth $1 billion on paper—and it’s all illiquid stock you can’t sell without losing control of the company you built.

According to Pirate Wires, a founder bringing in a few hundred thousand dollars a year would owe $500 million. Your only option is to sell half your stake under duress. Best case: the government seizes half of everything you own. Worst case: you can’t sell enough to cover the bill and go bankrupt.

The Google Founders Math: $60 Billion Each

Want to see the math on steroids? Look at Larry Page and Sergey Brin. Each owns roughly 3% of Alphabet stock, worth about $120 billion at Alphabet’s ~$4 trillion market cap. But because their shares have 10x voting power, this ballot proposition would treat them as owning 30% of Alphabet.

That’s $1.2 trillion in assessed “ownership.” At 5%, that’s a $60 billion tax bill. Per founder.

No wonder Sergey Brin terminated or moved 15 California LLCs in the 10 days before Christmas. The tax applies retroactively from January 1, 2026—meaning residents had to leave before the holidays to escape it. This wasn’t a political statement. It was survival.

‘This Could Wipe Me Out’

Palmer Luckey put it most directly: “It makes founder-led companies practically illegal.”

Andy Fang, co-founder of DoorDash, born and raised in California, explained why he’s planning to leave: “This Class B thing itself could wipe me out. Being founder-led is a big part of what makes DoorDash special.”

Chamath broke it down:

Archived tweet

You all use Uber, DoorDash and every other tech innovation made here but now you want the creators of these services to go bankrupt doing it?? That math doesn’t math. Everyone that is potentially touched by this will now leave and all that will result is a massive hole in California’s finances that you will be forced to fill. “Come Election Day, if this proposition lands on the ballot and succeeds as written, founders throughout the industry who haven’t already left California will not only be forced to sell control of their companies, many could go bankrupt. (Yes, literally).”

Chamath Palihapitiya @chamath January 13, 2026

That math doesn’t math. Founders aren’t leaving because they want to keep a few more millions. They’re leaving because the alternative is losing control of their companies or going bankrupt. Mike Solana spoke with 15 prominent billionaires in tech who would be directly impacted. If they’re not already leaving, they have a plan to leave.

The Villain: Robert Reich’s Revenge

This ballot proposition was designed by Robert Reich, former Labor Secretary, described by Pirate Wires as the “malevolent dark elf.” It’s backed by SEIU-UHW—the Service Employees International Union-United Healthcare Workers West.

The stated goal? Fill a projected $100 billion healthcare shortfall from federal Medicaid cuts. But California spent $12.5 billion last year on taxpayer-funded healthcare for illegal immigrants. Do the math on why they’re really short.

SEIU-UHW literally wants tech to leave California. The union and far-left power structure have designed a kill switch for the only economic force that can challenge them. This isn’t about funding healthcare. It’s about eliminating political opposition.

Ro Khanna’s Betrayal

Here’s what makes this truly infuriating: Ro Khanna, Silicon Valley’s own congressman, publicly supported this ballot proposition. Many of the billionaires impacted donated to his campaigns. After backlash, he downgraded to supporting a “wealth tax conceptually"—a distinction without a difference.

One-third of the US stock market is in "his district,” but won’t be in another 10 years because of Khanna’s support for asset seizure of post-tax wealth and unrealized gains taxes that will kill startups. Destroy California startups and you set back American innovation by a decade.

96% of Khanna’s campaign funds come from outside his district. He doesn’t answer to Silicon Valley. Friends are organizing to potentially primary him.

The Innovation Drain Has Begun

This isn’t about existing billionaires. Larry and Sergey are great guys who’ve done great things but who don’t really matter anymore. Young startup founders matter. And for any founder who believes they’re building a company worth at least $1 billion—which is every founder worth their ambition—it’s no longer safe to build in California.

At YC alone, we average 2-4 startups per year that become unicorns. This tax is an unrealized gains tax that would make a paper billionaire instantly liable for around $100 million. The value of the tech industry exists almost entirely in the future. Kill young founders and you kill the entire industry.

Even if this ballot proposition fails, Pirate Wires reports that the chaos of California direct democracy has led most industry leaders to the same conclusion: without systemic change, “this or something like it is inevitable.”

California politicians created an environment hostile to innovation and are surprised when innovators leave. SEIU-UHW and Robert Reich designed a kill switch for the startup ecosystem, and Ro Khanna—Silicon Valley’s own congressman—endorsed it. Founders aren’t leaving because they’re greedy. They’re leaving because staying means bankruptcy.

If you want California to remain the engine of American innovation, this ballot proposition must be defeated. And Ro Khanna must be held accountable by his actual constituents.