Mark Cuban lashed out at Silicon Valley Congressman Ro Khanna over the Democratic lawmaker’s proposal that the government should lend money to billionaires with large paper fortunes to help them pay wealth taxes.
“Ro, that’s insane. You want the state to loan money to the founder, who will then immediately give it back to the state as a wealth tax?” Cuban posted in a lengthy exchange with Khanna on X over the weekend. “Meaning the state has not received any incremental receipts? What’s the point of that?”
Khanna, who’s served almost a decade in Congress, supports a proposed one-time 5% tax on billionaires’ wealth in California that’s on the ballot this November. The proposal has rattled the ultra-wealthy, fractured state politics, prompted billionaires to exit the state, and put Khanna at odds with some of his former wealthy backers.
It’s also raised questions about how easy it will be to implement and whether some founders will be forced to sell stakes in their businesses to fund the levy.
For those whose fortunes are tied up in illiquid assets, Khanna suggested the government could provide loans in exchange for shares, with terms that are “long but not infinite.”
“At the end of the period, the loan is either paid back in cash, or the government assumes the shares,” Khanna said.
The idea emerged during a broader discussion with Cuban, a Dallas resident who has supported Democratic candidates including Kamala Harris, but opposes the wealth tax. Khanna’s proposal also drew rebukes from Anduril Industries co-founder Palmer Luckey and investor Bill Ackman.
California billionaires have led a costly campaign against Proposition 40. The measure, pitched by a healthcare union, has been embraced by progressive Democrats such as Khanna and Vermont Senator Bernie Sanders. While California Governor Gavin Newsom and his would-be Democratic successor Xavier Becerra oppose the levy, the state’s Democratic Party recently endorsed it.
Chris Larsen, co-founder of the cryptocurrency-payments company Ripple and a major Democratic donor, recently gave an extra $10 million to Building a Better California, a group created mainly to oppose the wealth tax, an Aug. 14 filing shows.
Tech founders have also argued that the California tax could value the super-voting shares they use to retain control of their companies, rather than their economic stake, potentially producing tax bills based on a stake that’s far larger than the founder’s actual economic ownership. The measure’s authors have disputed that interpretation.
In a reply to Cuban, Khanna cited Nvidia Corp.’s Jensen Huang, Advanced Micro Devices Inc.’s Lisa Su and Alphabet Inc.’s Sundar Pichai as examples of business leaders he said would remain in California even if the tax passes. He also argued that “most of the 250 billionaires in California DO NOT have this liquidity issue” and therefore wouldn’t need a loan.
But Cuban, who has a $10.6 billion fortune and a stake in the Dallas Mavericks, wasn’t convinced. He called the idea the “the biggest f——— you in the history of entrepreneurship. Ever.”
If the tax passes, “only idiot startup founders stay in Cali” and “you can bet if I’m investing in a multi billion dollar startup, I’m asking them to move from California first,” Cuban said on X.
Marques writes for Bloomberg.
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