Reid Hoffman, renowned for his role in establishing LinkedIn, voiced significant concerns regarding California's plan to impose a wealth tax on billionaires. On Thursday, Hoffman characterized the tax proposal as fundamentally flawed, cautioning that its design could adversely affect the innovation-centric economy of Silicon Valley. Although Hoffman disapproves of the tax, he recognizes a shared objective with Rep. Ro Khanna (D-Calif.) to combat widening inequality.
Hoffman disclosed on the social media platform X that Khanna had reached out to engage in dialogue about the wealth tax proposal. Despite his opposition, Hoffman expressed openness to discussions with elected officials, underscoring the importance of working through policy challenges collaboratively. He remarked that the tax initiative is so complex and problematic that a brief social media post cannot encapsulate all its shortcomings.
One of Hoffman’s primary critiques centers on the tax’s inclusion of illiquid assets, especially private company stock. Turner in private ownership commonly represents substantial portions of a founder's wealth but lacks immediate liquidity. Hoffman warned that taxing such assets could force entrepreneurs to liquidate shares prematurely, thereby destabilizing their companies and potentially jeopardizing ongoing innovation and growth.
He further emphasized that taxes not carefully crafted risk unintended consequences like tax avoidance behaviors, capital flight from the state, and economic distortions which collectively diminish the expected revenue benefits.
In contrast, Rep. Ro Khanna maintains steadfast support for the billionaire tax despite criticism and worries about wealthy individuals relocating out of California. Khanna’s Silicon Valley district is at the heart of the tech world, placing him squarely amid the competing interests of wealth redistribution and innovation protection.
The specific proposal aims to tax residents whose net worth exceeds $1 billion at rates up to 5% on their assets. For the ultra-wealthy, with net worth surpassing $20 billion as of January 1, 2026, the tax envisions a one-time levying of $1 billion. An additional proposal discusses a 1% tax on billionaires intended to fund healthcare programs particularly in light of cuts to federal Medicaid funding.
Khanna argues that innovation will persist unaffected by these levies, reasoning that billion-dollar companies operate robustly within just 50 miles of his district. This stance is part of a broader debate on whether such fiscal measures dampen entrepreneurial activity or serve essential roles in addressing income inequality.
The debate gains prominence as some affluent figures reportedly consider relocating. Investor Peter Thiel is noted in media reports as threatening to leave California if the tax becomes law; however, Khanna dismissed the idea that such taxes deter founders from establishing companies within the state.
Proponents of the tax highlight data indicating an effective tax rate drop for the ultra-rich following the 2017 federal tax overhaul, thereby reinforcing arguments to implement state-level wealth taxes to offset growing income disparities.
Conversely, critics including billionaire investor Bill Ackman caution that the tax might expedite the exodus of jobs and capital from California. The contrasting responses from prominent tech leaders include the Google co-founder Larry Page reportedly departing the state, against Nvidia CEO Jensen Huang’s expressed commitment to remain.
The ongoing discourse illustrates a complex balancing act between fostering innovation ecosystems and pursuing social equity, with tax policy as a critical fulcrum of debate.
In conclusion, Reid Hoffman’s stance brings attention to technical and practical issues embedded within the proposed billionaire wealth tax, urging policymakers to refine tax structures to minimize economic disruption while addressing inequality. The conversations between technology leaders and legislators like Khanna underscore the challenge of crafting policies that can achieve equitable outcomes without diminishing California’s global leadership in innovation.