LinkedIn co-founder Reid Hoffman criticized California’s proposed billionaire wealth tax on Thursday, calling it deeply flawed while acknowledging shared goals with Rep. Ro Khanna (D-Calif.) to address inequality without undermining Silicon Valley’s innovation engine.
Hoffman Pushes Back After Talks With Ro Khanna
Hoffman said on X that Khanna reached out to discuss California’s proposed wealth tax, a move Hoffman welcomed despite his opposition to the plan.
“While I am against the proposed tax, I’m always open to dialogue with our elected leaders,” Hoffman wrote, adding that the proposal is “badly designed in so many ways that a simple social post cannot cover all of the massive flaws.”
He pointed to the proposal’s plan to tax illiquid assets such as private company stock, warning that such measures could force founders to sell shares and destabilize businesses.
“Poorly designed taxes incentivize avoidance, capital flight and distortions that ultimately raise less revenue,” he said.
Khanna Defends Billionaire Tax Despite Backlash
Meanwhile, Khanna, whose Silicon Valley district sits at the heart of the tech industry, has remained firm in backing a billionaire tax despite threats from some wealthy residents to leave California.
The proposal would tax residents with net worth above $1 billion at up to 5% of their assets, while those with $20 billion or more as of Jan. 1, 2026, would face a one-time $1 billion tax.
A separate proposal calls for a 1% billionaire tax to fund healthcare amid federal Medicaid cuts.
Khanna argued the tax would not deter innovation, noting that companies worth more than $1 trillion operate within a 50-mile radius of his district.
Innovation Vs. Inequality Debate Intensifies
Responding to reports that investor Peter Thiel threatened to leave California over the tax, Khanna said founders do not avoid building companies because of potential future taxes.
Supporters argue the tax would address widening inequality, citing research showing the effective tax rate for America’s richest 0.0002% fell after the 2017 GOP tax overhaul.
Critics, including billionaire investor Bill Ackman, warn it could drive jobs and capital out of the state.
Google co-founder Larry Page is reportedly leaving the state even as Nvidia Corp CEO Jensen Huang reaffirms his commitment to California.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga
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