Mark Cuban said startup founders would leave under a proposed wealth tax. The founders themselves are split.
California will vote on its statewide “billionaire tax” in November. In an X response to Rep. Ro Khanna, Cuban said the tax would adversely affect founders, who may be billionaires in stock but lack the cash to pay it. “If this passes, only idiot startup founders stay,” he wrote.
In an email to Business Insider, Cuban clarified that “not every founder will face the tax.” There are “a lot of incentives to go elsewhere,” he wrote.
“Cali isn’t the only place with a nice climate,” Cuban wrote.
Business Insider put Cuban’s theory to the test. We asked three startup founders: If the tax passed, would you leave? The results were mixed.
The founders ready to run
Jesse Tinsley said the billionaires will flee California if it passes.
Tinsley founded Mainstreet.com, a holding company that houses Employer.com, Bench, and others. He wrote to Business Insider that he’d personally leave the state if the tax passed.
“It’s not just me,” Tinsley wrote. “It’s every CEO or founder over a billion dollars in net worth minus a handful.”
Tinsley said that billionaires don’t want to speak out publicly because they don’t want “the public backlash.” He also cited the Laffer curve, the economic theory that tax revenue will revert to zero as the tax rate increases past a maximized point.
Where would he go? Tinsley said he’d head to Florida. “If I was moving there permanently, I would get a home in Miami/Palm Beach area,” he wrote.
The state — and Miami specifically — has grown increasingly popular with a class of tech leaders.
Others were less committal but expressed frustration. Jaspar Carmichael-Jack said that he’d “seriously consider leaving California in the medium term” if the tax passed.
Carmichael-Jack cofounded Artisan, the AI startup behind those viral “Stop Hiring Humans” billboards. He grew up in the United Kingdom, but moved to San Francisco to build his company.
“It’s a direct hit to illiquid founders building companies, and it makes it harder to justify staying when other states are actively competing for startups,” Carmichael-Jack wrote.
The founders intent on staying
Not everyone is rushing for the exit.
Jensen Huang said he was “perfectly fine” with the tax. “We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it,” Huang said in January.
There are perks to being physically in Silicon Valley: the startup scene, ample investors, accelerators, and hacker houses. San Francisco has grown more prized in the AI era as opportunities and money pour in. Why leave?
HiJenny founder Michal Cieplinski wrote to Business Insider that founders “are not going anywhere” while the Bay Area remains central to the AI boom and engineering talent.
“The wealth tax mostly affects founders of public or large private companies and they, on their own, can move,” Cieplinski wrote.
“The companies and most of their employees will remain.”
What do you think of the wealth tax proposal? Tell us in the comments below.
