Billionaires Split Over California Wealth Tax

Owners paying staff in equity should weigh how Prop. 40 would treat realized gains and buybacks.

Updated on Nov. 3, 2026 in Public Companies

Billionaires Split Over California Wealth Tax

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Should the wealthiest Americans pay a wealth tax?

Billionaires across the political spectrum have come out against Prop. 40, a California ballot measure that would impose a wealth-related tax, with critics arguing it will drive the ultrawealthy and entrepreneurs out of the state. Some billionaires, however, support elements of progressive tax changes.

Why it matters

Opposition argues the measure would erode California's long-term income-tax base and competitiveness, since the ultrawealthy and entrepreneurs could relocate. For operators, the debate centers on whether taxing gains and buybacks would reduce investment in startups and small businesses.

The Tax Foundation's analysis of 2023 IRS data puts the maximum adjusted gross income of the bottom half of workers at $53,801. The current tax rate on corporate stock buybacks is 1%, and the proposed windfall tax applies at a $1 billion threshold per transaction.

The players

Prop. 40

A California ballot measure proposing a wealth-related tax that opponents say would push entrepreneurs and the ultrawealthy out of the state.

Mark Cuban

Entrepreneur and investor who founded his first company in 1983 and has voiced skepticism of wealth taxes over their potential effect on startup and small-business investment.

Jeff Bezos

Founder of Amazon who in a May CNBC interview advocated eliminating federal income tax for the bottom half of workers.

Bill Ackman

Hedge fund manager and founder of Pershing Square Capital Management who criticized wealth taxes on social media last December.

Tax Foundation

Nonpartisan tax policy research organization whose analysis of 2023 IRS data supplied the income threshold figure cited in this story.

The details

Under the measure, gains would be treated as realized when transferred as a gift or at death, and long-term capital gains would be taxed at rates matching ordinary income. Mark Cuban, who has paid employees partly in equity since starting his first company in 1983, has said he would raise the 1% tax on corporate buybacks, while expressing skepticism that wealth taxes could stunt investment in startups and small businesses. Critics note that wealthy individuals can borrow tax-free against appreciating assets that do not generate cash, which they argue undercuts the revenue case.

May: Jeff Bezos advocated eliminating federal income tax for the bottom half of workers in a CNBC interview.
Last December: Bill Ackman criticized wealth taxes on social media.
2023: IRS data used for the income-threshold analysis.

Market Landscape

The debate follows a long-running argument over whether taxing wealth or unrealized gains shifts capital and entrepreneurs across state lines. Billionaires from both sides of the political spectrum are now weighing in, with some backing progressive tax changes while others warn of flight from California.

Operators with significant equity compensation or appreciating business holdings should factor the proposed treatment of realized gains and buybacks into long-term planning. Decisions on structuring equity or relocation should be reviewed with qualified counsel or an accountant.

The takeaway

The core operating question is whether taxing realized gains and buybacks alters how California companies compensate staff and fund growth. Track the measure's final text and any state fiscal analysis before adjusting equity-compensation plans, and route those decisions to qualified tax professionals.