San Francisco sees a weird and very real protest against California’s new Wealth Tax: “March for Billionaires”

The fight against California’s proposed ‘Billionaire’s Tax’ just hit a new level of strange, because San Francisco just saw a “March for Billionaires”. When news of the event first surfaced, complete with the pithy tagline, “Vilifying billionaires is popular. Losing them is expensive,” most people, including many online, assumed it had to be a bizarre piece of satire. Honestly, who wouldn’t think that? As one social media user noted, “this is a joke/satire right??”

You can forget the joke theory, though. The organizer is Derik Kauffman, the founder of the AI startup RunRL, a company that previously went through the prestigious Y Combinator accelerator program. Kauffman confirmed he organized and funded the event entirely himself. He stressed that there are no big-money associations or external companies involved in putting this whole thing together; it’s just him taking a stand.

To understand the outrage, you have to look at the specifics of the legislation. According to TechCrunch,  the policy, dubbed the Billionaire Tax Act, was introduced last year and calls for a one-time 5% tax on the total wealth of any Californian worth over $1 billion. Supporters, including the state’s healthcare union SEIU, argue that the revenue generated could be used to fund crucial public services and help California offset recent federal funding cuts.

Makes sense to me

However, the bill has sparked a massive outcry from tech’s heavy hitters, leading to heavy lobbying aimed at defeating the bill. Many prominent tech figures have already either threatened to leave the state or actually packed up and moved. Kauffman’s specific concern is that this policy would crush the startup ecosystem. He argues that the bill is “fatally flawed” because of how it treats founders whose wealth is essentially just “on paper.”

Think about it: a founder might be technically worth a billion dollars based on the valuation of their private company shares, but they don’t have that cash sitting in a bank account. If forced to pay a 5% wealth tax, they would have to liquidate those shares, potentially on unfavorable terms, triggering capital gains taxes and potentially causing them to lose control of their company.

Kauffman argues that “Many founders would be hit with wildly disproportionate tax bills.” He also pointed out that this type of comprehensive wealth tax has no precedent in the US. Instead, billionaires usually get Tax cuts while we commoners get questionable promises. He noted that after Sweden eliminated their wealth tax 20 years ago to stop capital flight and encourage entrepreneurship, the nation now has 50% more billionaires per capita than the US does. 

Kauffman admits he isn’t aware of any actual billionaires planning to attend the march. In fact, the whole uproar is a little ironic when you consider the political reality of the situation. California Governor Gavin Newsom has already stated publicly that he would veto the Billionaire Tax Act if it somehow managed to pass the legislature.