California Billionaire Tax 2026: San Jose Mayor Warns of Economic Fallout

Will California’s elite pay up or pack up? Matt Mahan, the Democratic mayor of San Jose, is sounding the alarm over a proposed 5% wealth tax that he claims could trigger a massive exodus from Silicon Valley. According to CNBC, Mahan warned that the measure could "sink California's innovation economy" rather than helping it.

The Battle Over California Billionaire Tax 2026

The proposed ballot measure, officially known as the 2026 Billionaire Tax Act, seeks to levy a one-time 5% tax on the net worth of the state’s wealthiest residents. Driven by the SEIU-UHW labor union, the initiative aims to bridge a critical gap in California’s healthcare budget. If approved by voters, the tax would be retroactive to January 1, 2026.

Mayor Mahan took to X on Monday to voice his opposition, stating that while the tax might "feel good in the short run," working-class families will ultimately "pick up the tab." He argued that driving out high-net-worth individuals would erode the tax base needed for essential public services and infrastructure.

Fears of a Silicon Valley Exodus

The tech industry isn't taking the threat lightly. David Sacks, a venture capitalist and current crypto czar, suggested that Austin could soon replace San Francisco as the world’s tech capital. Reports from The New York Times indicate that major figures like Peter Thiel and Google co-founder Larry Page have also considered relocating to avoid the tax burden.

Proponents argue the tax could raise $100 billion through 2031 from just 200 individuals. To qualify for the ballot, the measure needs roughly 875,000 signatures. Meanwhile, politicians like Ro Khanna are caught in the crossfire, attempting to balance support for a modest wealth tax with the need to protect the startup ecosystem.