Ben Horowitz, co-founder and General Partner of Andreessen Horowitz (a16z), said California’s proposed wealth tax represents the best strategy he’s seen to dismantle Silicon Valley’s network effect, citing Norway’s entrepreneur exodus as evidence.
Norway Unrealized Capital Gains Tax Drives Exodus
Speaking with John Coogan and Jordi Hays on a TBPN podcast released recently, Horowitz said Norway’s unrealized capital gains tax caused entrepreneurs to flee the country.
“Norway has an unrealized capital gains tax and Norway’s got a lot of extremely smart people, great entrepreneurs, but they all left,” Horowitz said.
He further explained that entrepreneurs in Norway were unable to pay the tax due to the increased value of their private companies, ultimately leading to their departure from the country.
“When you talk to entrepreneurs in Norway, they’re like, ‘Well, I literally can’t pay the tax because the company got marked up to whatever, a billion, $2 billion, and I own a lot of it and I can’t get that money out. It’s a private company.’”
This, Horowitz said, has resulted in the death of tech entrepreneurs in Norway.
Horowitz also addressed the proposed wealth tax in California, stating that it is “the best strategy” he has seen to disrupt the Silicon Valley network effect.
Silicon Valley Network Effect at Risk
The venture capitalist said global leaders regularly ask how to replicate Silicon Valley’s success in creating companies with GDPs larger than most countries.
“It’s been so hard to break the Silicon Valley network effect, but this is the best strategy I’ve seen”, if the goal is to wreck California tech, Horowitz said.
California Wealth Tax Proposal
Horowitz’s comments focused on California’s proposed wealth tax measures, which would target high-net-worth residents to help address state budget deficits and fund public services.
His comments align with data from Norwegian think tank Civita, which shows that 261 residents with assets over 10 million kroner left Norway in 2022, followed by 254 in 2023, more than double the number recorded before the tax increase.
The American tech entrepreneur’s comment comes at a time when several prominent figures in the tech industry are expressing their concerns about the proposed wealth tax in California.
LinkedIn co-founder Reid Hoffman previously criticized the measure as “badly designed in so many ways,” saying it could undermine Silicon Valley’s innovation engine.
On the other hand, the tax has led to some tech leaders, including Alphabet‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Larry Page and Sergey Brin, moving their business entities out of California.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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