San Jose's Mayor Comes Out Against the California Wealth Tax

San Jose has been called the capital of Silicon Valley so the opinion of its elected officials could carry some weight in the ongoing discussion over a plan to create a new 5% wealth tax on the state's tech billionaires. Today, the mayor of San Jose announced his opposition to the tax which is being pushed by the SEIU and by Rep. Ro Khanna. Mayor Matt Mahan says passing this would be a disaster for the state.

My mom always told my sisters and me, “don’t cut off your nose to spite your face.”

And as I think about the ramifications of the so-called Billionaire Tax, I can’t help but hear her voice. We need a rising economic tide to lift all boats, not a political plan that will sink…

— Mayor Matt Mahan (@MattMahanSJ) January 5, 2026

We need a rising economic tide to lift all boats, not a political plan that will sink California's innovation economy. 

I realize no one has sympathy for billionaires. But the truth is — they don’t have to, and many won’t, stay here if this tax is implemented. Each year, 40-50% of the state’s income tax comes from the top 1% percent of earners, who are the most mobile members of our society.…

— Mayor Matt Mahan (@MattMahanSJ) January 5, 2026

Driving billionaires out of state might feel good in the short run but working people (as is almost always the case) will pick up the tab for this political ploy. The people who lose in the long run are California families who will be asked to foot more of the bill for government services and infrastructure.

Income inequality is a very real issue and we need to address it with real solutions – like closing the massive loopholes nationally that allow the wealthiest among us to essentially never pay taxes on many capital gains. But for California to go it alone will be a disaster.…

— Mayor Matt Mahan (@MattMahanSJ) January 5, 2026

What’s even worse is the proponents of the tax simply want higher taxes with no meaningful plan outlined on how to spend the money we have now better, much less the billions in new taxes they want. Waste, fraud and abuse are real in the healthcare system – and throughout state…

— Mayor Matt Mahan (@MattMahanSJ) January 5, 2026

Waste, fraud and abuse are real in the healthcare system – and throughout state government. 

Let’s start by doing better before we start driving entrepreneurs and innovators out of California, Silicon Valley and San Jose to fund insurance fraud and other waste. (5/5)

— Mayor Matt Mahan (@MattMahanSJ) January 5, 2026

That's a clear vote of no confidence on this plan and its proponents. But despite the backlash, Ro Khanna is said to be meeting with some left-leaning billionaires.

Khanna tells Axios that he's setting up meetings with tech leaders like Netflix co-founder Reed Hastings and LinkedIn co-founder Reid Hoffman, plus labor leaders, to work out such details...

Khanna believes that slightly reducing income inequality could help millions of citizens obtain better health care, but hasn't yet figured out how to thread the policy needle.

If he does so, it could provide a model for other politicians of both parties. If not, it could become a warning against trying.

Meanwhile, Sen. Bernie Sanders loves this plan so much he's introducing a version at the federal level. 

On Tuesday, Sanders endorsed the billionaire tax proposal and said he plans to call for a nationwide version.

“This is a model that should be emulated throughout the country, which is why I will soon be introducing a national wealth tax on billionaires,” Sanders said on X. “We can and should respect innovation, entrepreneurship and risk-taking, but we cannot respect the extraordinary level of greed, arrogance and irresponsibility that is currently being displayed by much of the billionaire class.”

A national version of the billionaire wealth tax will never pass, but Bernie is right that this might be the only way to get around the problem of billionaires simply packing up and heading to another state with better tax laws. So, until that day comes, what California is trying to do is really destined to fail. The Washington Post's editorial board did a good piece about it last week.

Many progressives think of taxation the way teenage boys think about cologne: if some is good, more must be great. California already reeks of overtaxation, but it’s thinking about trying out its most potent scent yet: a wealth tax. Just a whiff has some of the state’s wealthiest residents fleeing.

In 2012, California voters passed Proposition 30, increasing the marginal tax rate on high-income households up to 3 percent. This was sold as a temporary plug for budget holes during the Great Recession, but another initiative, Proposition 55, extended the taxes through 2030.

High earners responded by either leaving the state or reducing their taxable income. “These responses eroded 45.2 percent of state windfall tax revenues within the first year and 60.9 percent within 2 years,” economists Joshua Rauh and Ryan Shyu concluded in a 2024 paper...

California taxes are already sky high, and its tax base is extremely skewed towards the top. Over 40 percent of personal income tax revenue generally comes from 1 percent of taxpayers. That makes Sacramento especially vulnerable to small gyrations at the top.

It's a truly terrible idea but I can't help thinking that Californians might deserve the slow-motion train wreck this would cause. If they really want socialism so badly, maybe they should have it. Then, very soon afterwards, they would finally run out of other people's money. The crash that followed all the billionaires leaving the state would be epic, but maybe then they would finally learn to stop electing socialists like Ro Khanna.