Mark Cuban’s Arguments Against The Proposed 5% CA Wealth Tax

Aug 17, 2026 07:00 PM - 1 hour ago 1

Late successful the hours of August 15, X users were treated to a show that came successful the shape of a heated statement betwixt 2 improbable adversaries: billionaire investor and entrepreneur Mark Cuban and Representative Ro Khanna (D-CA). The statement centered astir California’s Proposition 40, a projected 5% wealthiness taxation connected the state’s billionaires. What began pinch Khanna touting a caller conjugation supporting the ballot measurement quickly turned into a heated statement astir issues for illustration superior formation and plus liquidity. At 1 point, Cuban moreover told Khanna that he “doesn’t understand business”. Part of the logic why this speech was different is that Mark Cuban is not represented by Khanna. Instead, Cuban seemed overmuch much willing successful speaking up for chap entrepreneurs. Despite the escalations, Cuban raises galore important concerns facing entrepreneurs some wrong California and beyond, peculiarly arsenic Khanna continues to push for a nationwide wealthiness taxation that is moreover much utmost than the 1 connected the ballot this coming November.

Explaining The Proposed California Wealth Tax

Proposition 40 traces backmost to an October 2025 filing by St. John’s Community Health and SEIU-UHW. This proposition has since received capable signatures to suffice for the November 2026 ballot arsenic a one-time, 5% taxation connected the nett wealthiness of California residents pinch much than $1 cardinal successful assets. 90% of the gross raised from this one-time taxation would spell toward the state’s wellness attraction programs, pinch the remainder divided betwixt acquisition and nutrient assistance.

While location are plentifulness of reasons to support raising revenues from a mini group of group to thief salary for an important nationalist expenditure, location has besides been important guidance to this ballot measurement to the constituent that the probability of its transition is unclear.

Among the guidance are a key group of California billionaires who person already fled the state wholly successful an effort to debar paying this one-time tax. California billionaires person besides contributed much than $100 cardinal into campaigns to advertise the costs of this measure arsenic good arsenic backmost 2 rival measures (Propositions 41 and 42) that would nullify Proposition 40.

However, what mightiness beryllium the astir compelling arguments against Proposition 40 travel successful the shape of uncertainty arsenic to really effective it mightiness beryllium successful raising funds. Different from billionaires taking actions to forestall Proposition 40’s passage, the uncertainty successful estimates comes from academics and constituent estimates that propose that not only mightiness Proposition 40 neglect to raise $100 cardinal successful incremental taxation revenues, it could besides perchance lead to a nett nonaccomplishment successful taxation revenues.

Mark Cuban’s Core Arguments Against The California Wealth Tax

Mark Cuban is simply a billionaire investor and entrepreneur. He is good known arsenic being the erstwhile proprietor of the NBA’s Dallas Mavericks arsenic good arsenic being a “shark” connected ABC’s deed show “Shark Tank”. Cuban has developed a estimation arsenic being a salient sound that favors business-first policies.

Ro Khanna represents California’s 17th legislature district, which includes Silicon Valley. He has emerged arsenic a highly visible proponent of taxing billionaire wealth, including being a co-sponsor of a national wealthiness taxation measure (alongside Senator Bernie Sanders).

Cuban raised 4 cardinal objections to Representative Khanna’s support for Proposition 40:

1) Illiquid Capital Makes The Tax Difficult For Startup Billionaires To Pay

Cuban’s cardinal constituent is that galore recently minted billionaires are “cash poor, banal rich,” meaning their wealthiness exists connected insubstantial arsenic private-company equity, not successful a slope account.

Cuban posed the mobility to Khanna of really a laminitis is expected to constitute a cheque for 5% of the wealthiness erstwhile location is not a marketplace for the personification to waste into. Khanna responded pinch the thought of letting billionaire founders return retired a non-recourse indebtedness to salary their taxes, which fundamentally would fto billionaires get against their institution ownership.

However, Cuban quickly noted the irony; progressives person agelong attacked billionaires for borrowing against banal alternatively of realizing taxable gains, yet the aforesaid system is now being projected arsenic the tax’s ain backing source.

2) Capital Flight Of Existing Businesses Might Increase

Cuban highlighted that the taxation gives California-based companies a financial inducement to relocate. While the estimated $100 cardinal successful incremental taxation revenues provided by supporters of Proposition 40 already factors successful immoderate taxation avoidance owed to superior flight, Cuban’s informing suggests that the estimates could beryllium excessively low, a constituent echoed by different economists who are independent of Proposition 40’s sponsorship.

Cuban’s informing is little astir theoretical exits of billionaires retired of California and is much astir underscoring the high-profile departures that person already taken place, for illustration Sergey Brin, Larry Page, and Peter Thiel.

3) Future Startups Might Seek To Avoid California Operations

Beyond companies leaving, Cuban based on the taxation would deter caller startups and finance from ever landing successful California successful the first place. While this conception is akin to superior flight, it differs successful the consciousness that galore cities person go celebrated destinations for technology-based companies, for illustration Austin, TX, Denver, CO, Nashville, TN, and Raleigh, NC.

If startups fearfulness that this one-time modulation taxation mightiness hap again successful the future, they whitethorn favour different imaginable location complete Silicon Valley. These startups tin make important jobs, growth, and innovation. Cuban’s statement suggests that Proposition 40 could wounded Silicon Valley’s estimation arsenic being the apical location for tech startups wrong the U.S.

4) California Can Consider Other Methods To Address Budget Shortfalls

Underlying Cuban’s pushback is simply a broader statement that California’s fiscal problems should beryllium solved done spending subject alternatively than a caller taxation connected wealth. Cuban highlighted really the authorities already has the highest income taxation complaint for individuals (13.3%) and among the highest income taxation rates connected corporations (8.8%).

Based connected this, Cuban projected a elemental thought – the authorities is not undertaxing its citizens (and, successful particular, its able taxpayers and corporations). Instead, the authorities mightiness person a spending problem that tin beryllium addressed to thief finance healthcare and education.

Where Ro Khanna Pushes Back Against Mark Cuban On The California Wealth Tax

Khanna’s antagonistic is that astir of the 250 billionaires targeted by Proposition 40 do not really look Cuban’s liquidity problem — he cites figures suggesting astir 72% of their corporate wealthiness sits successful nationalist stock, not illiquid startup equity, meaning the authorities would simply cod from sellable assets successful the immense mostly of cases.

Khanna besides points retired that immoderate of California’s wealthiest and astir liquid billionaires, including Nvidia’s Jensen Huang, person voiced support for the measure, undercutting the thought that the ultra-wealthy are uniformly opposed. His constituent is that this is not thing that each billionaires are opposed to, and immoderate are moreover welcoming it.

Also, to Khanna’s points, superior formation cannot beryllium perfectly measured, and advocates and adversaries tin cherry-pick examples to constituent retired erstwhile it is (or is not) pervasive.

Despite the points raised by Khanna, Cuban’s arguments stay valid. In fact, according to estimates from a squad of economists from Stanford University – Hoover Institution, successful modeling 100,000 scenarios of the implementation of the California Wealth Tax, California loses taxation revenues successful 71% of those scenarios. The mean nett coming worth of these scenarios is antagonistic $24.7 billion. While this is conscionable 1 group of analysis, it surely sheds ray connected Cuban’s concerns astir whether Proposition 40 mightiness wounded Californians successful the end.