AI Billionaire's Shocking March Against California's Wealth Tax—Will He End Up in Jail?

The battle over California's proposed Billionaire Tax is stirring intense debate, particularly within the tech community. As the proposal gains traction, an unexpected event has emerged—a so-called “March for Billionaires” scheduled for this Saturday in San Francisco. The event’s website features a slogan that reads, “Vilifying billionaires is popular. Losing them is expensive,” raising eyebrows and sparking skepticism among observers who initially assumed it was a satire or joke.

The San Francisco Examiner recently revealed that the event is organized by Derik Kaufmann, the founder of the AI startup RunRL, which had previously participated in the Y Combinator accelerator program. Kaufmann, who claims the event is solely his initiative without external funding or backing, expressed that he believes California's proposed wealth tax would severely harm the state’s tech economy.

Introduced last year, the Billionaire Tax Act aims to impose a one-time 5% tax on the total wealth of Californians worth over $1 billion. The legislation has garnered support from the Service Employees International Union (SEIU) as a potential means to fund essential public services and mitigate recent federal funding cuts. However, it has also faced vehement opposition from multiple high-profile figures in the tech industry, many of whom have threatened to leave California if the bill passes.

Kaufmann articulated his concerns about the implications of the tax, particularly for startup founders. “This tax in particular is fatally flawed,” he stated. “It hits startup founders whose wealth is only on paper. They would be forced to liquidate shares on potentially unfavorable terms, incurring capital gains taxes and giving up control. Not to mention the difficulty of valuing private companies.” He added that many founders might face disproportionately high tax bills, creating a chilling effect on entrepreneurship in the state.

He highlighted that no precedents exist for such a comprehensive wealth tax in the United States. Citing examples from other countries, he noted that Sweden abolished its wealth tax 20 years ago to prevent capital flight and enhance entrepreneurial activity, leading to 50% more billionaires per capita than in the U.S.

Online reactions to Kaufmann’s planned march have ranged from incredulity to ridicule, with some social media users questioning the feasibility of billionaires actually participating in a public demonstration. Kaufmann himself admitted that he is unaware of any billionaires planning to attend, estimating that the event might attract “a few dozen attendees.”

Interestingly, the uproar surrounding the proposed tax may be somewhat misplaced, given that the bill's chances of becoming law appear slim. California Governor Gavin Newsom has publicly stated that he would veto the bill should it somehow pass the legislature.

As the march approaches, the tension surrounding the Billionaire Tax continues to escalate, illustrating the stark divide between California’s wealthy residents and the policymakers advocating for fiscal reforms aimed at addressing economic inequality. The outcomes of these debates could have lasting implications for the state's economy and its reputation as a hub for innovation.