The mayor of Silicon Valley's largest city has come out against a proposed ballot initiative that would impose a wealth tax on California's billionaires, as leaders debate the benefits of the proposal.
"I'm all for taxing billionaires, but I think this is the wrong way to do it," Mayor Matt Mahan of San Jose told CBS News Bay Area on Thursday.
Mahan said he was concerned about unintended consequences of the proposal, such as billionaires potentially moving their companies out of California, which he said would lead to more of a burden on middle class families. Critics of the proposal have noted tech billionaires Peter Thiel and David Sacks had opened offices out of state before the end of 2025.
"Having California go it alone on a wealth tax is incredibly risky, and it particularly threatens the industry that my community, San Jose, Silicon Valley, relies on," he told Reed Cowan.
Mahan said the state's tax code is already progressive, noting that the top 1% of income earners in the state pay more than 40% of the income tax in California every year. The mayor urged the closing of loopholes that benefit the wealthy.
"I don't think high net worth individuals should be able to borrow against their unrealized stock options or stock gains as a way to avoid paying taxes. I think there are some loopholes that would generate more revenue and just create a tax code that's fairer for everyone, so that stuff makes a lot of sense," he said.
Mahan also urged increasing efficiencies in government and by rooting out what he called "waste, fraud and abuse."
"Just in the last five years fraudulent unemployment claims in California have amounted to somewhere between $20 and $30 billion in total," he said.
Under the proposed ballot initiative, California would institute a one-time tax of 5% on the wealth of the state's estimated 255 billionaires. The proposal, which is currently gathering signatures, is being proposed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), a union representing more than 120,000 health care workers and patients in the state.
"Collectively, they have $2 trillion in wealth — an almost unimaginable amount of money," said a statement on the campaign's website. "Most of their wealth is invested in the stock market and other holdings and will never be taxed in their lifetimes due to state and federal tax loopholes. A one-time tax on these very wealthy individuals is a commonsense solution to the looming devastation facing our healthcare system."
If approved by voters, 90% of the money raised by the tax would be allocated for health care, while 10% would go to food assistance or education-related programs.
According to a summary by California's Attorney General, the tax would be applied to assets including: • Businesses • Securities, such as stocks and bonds • Art • Collectibles • Intellectual property
Meanwhile, real estate and some pensions and retirement accounts would be excluded from the tax.
If approved, billionaires would have to pay the tax in 2027 or could opt to spread payments across five years for an additional annual nondeductible charge of 7.5% of the remaining unpaid balance.
According to the text of the proposal, the measure covers billionaires who are residents of the state as of Jan. 1, 2026.
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