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Posted by Joshua Scheer
In 2026, California isn’t just debating a tax. It’s staging a showdown over who actually governs the Golden State: voters or venture capital.
Politico has already dubbed this election cycle “the big tech flex,” and as reported by The Guardian, Silicon Valley’s billionaire class is pouring money up and down the ballot — from gubernatorial hopefuls to school board races — in what amounts to a full-spectrum political investment strategy.
With Gov. Gavin Newsom term-limited, tech money is hunting for its next reliable steward. An emerging favorite? San Jose Mayor Matt Mahan. As Sonoma State political scientist David McCuan told The Guardian, this is a “golden opportunity” for tech to reset priorities — and perceptions. Translation: rebrand deregulation as pragmatism.
With said Brian Brokaw, a longtime Newsom adviser who is leading a PAC opposing the tax. adding “The issues that are really going to be motivating Democrats this year, affordability and the cost of health care and cuts to schools, none of these would be fixed by this proposal. If fact, they would be made worse,”
McCuan describes a “multi-pronged attack.” Tech billionaires aren’t betting on one horse; they’re buying the racetrack. Relaxed taxation. Minimal AI regulation. Strategic donations early and often. When you’re an “uber-zillionaire,” you don’t hedge — you saturate.
Enter Bernie Sanders
But into this gilded scramble walks Sen. Bernie Sanders, campaigning in Los Angeles today for a proposed billionaire tax that has Silicon Valley in open revolt.
“Our nation will not thrive when so few own so much,” Sanders wrote, backing the measure “at a time of unprecedented and growing wealth and income inequality.”
He added on X.com today “The billionaire class is on the warpath against working families. They want more and more, and they will not be satisfied until they have it all. Instead of spending tens of millions on ads against a wealth tax, we have a better idea: Start paying your fair share of taxes.”
The clash isn’t merely ideological — it’s intra-party. Newsom has warned the tax could send the wealthy fleeing and destabilize state finances, arguing California would be left at a “competitive disadvantage.”
The governor’s message is clear: tax the billionaires and they’ll take their toys — and tax bases — elsewhere.
The Billionaire Exit Plan
The wealthy aren’t waiting to find out.
According to The New York Times, California’s richest residents are already maneuvering to reduce their net worths, shuffle assets, and even consider divorce as a tax mitigation strategy.
“What’s the first way to avoid the tax?” one speaker quipped at a private gathering of the ultra-wealthy. “Get divorced.”
Accountants confirm the scramble. “The first conversation was, ‘Well, are we leaving or are we not?’” said Chris Mays of Armanino. “And then the next conversation is, ‘OK, we’re staying. So how are we going to mitigate this?’”
Princeton economist Owen Zidar warns that no one can predict the fallout of a “shock of this magnitude.” Meanwhile, University of Missouri law professor David Gamage — who helped craft the proposal — notes that every tax has leakage, particularly those aimed at the wealthy. The real question is whether leakage is a reason for surrender.
Democracy or Capital Flight?
What makes this moment different is scale.
California isn’t simply debating whether billionaires should pay more. It’s confronting whether a modern state can meaningfully tax concentrated wealth without triggering a coordinated capital strike.
On one side: Sanders, arguing that extreme inequality corrodes democracy.
On the other: Newsom and Silicon Valley, warning that taxing concentrated wealth may hollow out the state’s fiscal base.
Hovering above it all is the unmistakable scent of political money. As The Guardian reports, tech’s war chest is being deployed everywhere — governor’s mansions, city halls, school boards — ensuring that whatever happens with the wealth tax, Silicon Valley’s voice will be amplified at every level of government.
The deeper issue is structural. When billionaires can fund campaigns, bankroll ballot initiatives, finance think tanks, and hire tax attorneys sophisticated enough to reduce their “paper” wealth below a billion dollars, taxation becomes less a policy debate and more a chess match between lawmakers and liquidity.
If 2026 is indeed “the big tech flex,” then the billionaire tax fight is its stress test.
1. Can a state that birthed trillion-dollar tech empires regulate them?
2. Can democracy tax concentrated wealth without triggering retreat?
3. Or does the mere threat of departure give the ultra-wealthy veto power over public policy?
California is about to find out.
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