Investor Mark Cuban has voiced strong opposition to a proposed "billionaire tax," also known as Proposition 40, criticizing its potential economic consequences and the approach advocated by California Representative Ro Khanna.
Cuban argued in an exchange on X that a tax requiring entrepreneurs to pay 5% of their wealth when their startup companies go public would likely drive tech entrepreneurs out of California. He asserted that venture capital firms would be hesitant to invest in companies whose California-based residents face such a tax, citing a guaranteed 5% loss as a disincentive.
Khanna's proposal included a provision for the government to lend money to entrepreneurs to pay the tax if they did not sell company assets. Cuban countered that this scenario, where individuals are forced to borrow money to cover taxes, differs significantly from borrowing against assets for lifestyle or investment. He suggested that if entrepreneurs couldn't repay these tax-related loans, the state might be forced to seize assets, leading to the government owning struggling companies and potentially damaging the state's economy and startup culture.
Cuban characterized Khanna's approach as "ideology is not a strategy" and criticized the representative, who represents Silicon Valley, for aligning with what Cuban termed a "socialist mob." The investor also pointed out Khanna's personal wealth, suggesting hypocrisy in advocating for such a tax while not voluntarily contributing 5% of his own net worth.
Cuban framed Khanna's actions as a bid for political power, positioning himself as a champion for the "working class" and aiming to fill a left-wing political lane ahead of a potential presidential run in 2028. He contrasted this with the more transparent socialist platform of Bernie Sanders.
Cuban urged other business leaders to speak out against Proposition 40, emphasizing the need for a united opposition to the "billionaire tax."