American billionaire Mark Cuban has issued a sharp warning to Representative Ro Khanna (D‑Calif.) over California’s proposed 5% billionaire tax, known as Proposition 40. In a lengthy post shared on social media platform X (Formerly known as Twitter) Cuban argued that the measure would drive startup founders out of the state, saying blunt that ‘only idiot startup founders’ would remain if the bill passes. The tax proposal, set for a vote on November 3, would levy 5% on all assets owned by California’s wealthiest residents to fund healthcare, schools, and food assistance programs. Supporters, including Khanna, frame it as standing up for the working class against the billionaire elite amid rising living costs. Cuban, however, warned that the policy misunderstands how startup wealth works.
Mark Cuban’s argument
Cuban explained that many founders of “Deca Unicorns” — startups valued at $10 billion or more — are cash poor but stock rich. Their net worth comes from equity, not liquid assets. Taxing them would force founders to borrow against shares or sell stock prematurely, undermining growth. “Do you really think each of multiple founders can just pull out $250 million per billion of net worth from their raise? You know they can’t,” he wrote.
Threat to California’s startup ecosystem
Cuban said if the measure passes, he would make not being in California a prerequisite for investment, citing Dallas, Pittsburgh, and Indiana as alternatives. He warned that the tax would accelerate capital flight and discourage innovation in Silicon Valley. “Ideology is not a strategy, Ro,” Cuban added, stressing that the bill risks dismantling California’s startup advantage.
Read Mark Cuban’s complete post here
Ro, I like you. You know that. But you need to read the state of the state. The number of Deca Unicorns in Cali is growing by the day as investors chase amazing startups. A unique feature of these 10b startups is that even if they raise a billion, little, if any of that money goes to the founders, who are now worth billions of dollars over night. They are the definition of cash poor, stock rich How are you going to tax them ? Make them borrow money against their shares, if they can? They just raised money to grow their company and a bank will come along and loan them money ? A company that has been in business maybe less than a year ? lol Will you take their stock if they can’t ? Do you really think each of multiple founders, who started an amazing company in Cali and is now a billionaire, can each just pull out $250m per billion of net worth from their raise ? You know they can’t. If this passes , and it doesn’t directly impact me at all, I won’t be a cali resident, but you can bet if I’m investing in a multi billion dollar startup, I’m asking them to move from California first. IMO, if this passes, only idiot startup founders stay in Cali. I’ve done it before and will do it again. Dallas. Pittsburgh. Indiana. I will make NOT being in California a pre requisite for an investment Ideology is not a strategy Ro.
