Paul Waldman makes an excellent point about the wealthy whiners who are threatening to leave California if the state passes a 5% wealth tax. (Poor widdle boo-boos…)
The efficacy of wealth taxes compared to other ways of taxing the super-rich is a topic we’ll set aside for another day; for the moment, I want to focus on the predictable but utterly irrational freak-out happening among those who would be subject to such a tax. And it isn’t just in California; billionaires are making the same (mostly empty) threats in Seattle and New York as well. But the California measure is the big one, because the tax it would impose are higher and there are so many tech billionaires in the state. The initiative is being pushed by the Service Employees International Union; if it succeeds, 90% of the revenue will go toward health care and the remaining 10% to education. Naturally, the billionaires are up in arms:
Billionaires including Peter Thiel, the tech venture capitalist, and Larry Page, a co-founder of Google, are considering cutting or reducing their ties to California by the end of the year because of a proposed ballot measure that could tax the state’s wealthiest residents, according to five people familiar with their thinking.
Mr. Thiel, 58, who owns a home in the Hollywood Hills and operates a personal investment firm from Los Angeles, has explored opening an office for that firm, Thiel Capital, in another state and spending more time outside California, three of the people said.
Let’s consider Larry Page, who is less of a public person than some of his peers. Page is currently worth $257 billion, making him the second-wealthiest person on Earth after Elon Musk. That means that as of today, 5% of Page’s wealth is a little under $13 billion.
Which is a lot of money — you could fund the salaries of a couple hundred thousand home health aides with just what this one guy would have to pay. But it’s not a lot of money to Larry Page. In fact, he regularly loses or gains that much money in a matter of days, and it has zero effect on anything he chooses to do or how he chooses to live.
That’s because the vast majority of his wealth, like that of almost all the super-rich, is held in stocks, which go up and down. An illustration: This April, Donald Trump unveiled a ludicrous set of tariffs on what he called “Liberation Day,” and over the next two days, the S&P 500 lost 10% of its value. But I didn’t see billionaires saying they were going to take all their money and put it in some other country’s stock market, let alone pick up and leave the place they live. They knew that things would probably turn around, and they did.
They certainly did for Larry Page. About half of his wealth is in shares of Alphabet, Google’s parent company. Just three years ago, his Alphabet holdings were worth one-third of the $122 billion those shares are worth today.
They lose 5% of their wealth all the time and don’t have temper tantrums over it. It’s couch cushion money for people like him. So why does the idea of a tax turn them into chicken littles running around screaming “the sky is falling?”
I suspect it’s just another chance for them to paint themselves as victims as virtually every rich person somehow feels the need to do these days. These Techbros, who are actually even worse than other rich people, are not only the most arrogant people on the planet, they also feel that they’re treated very unfairly by the plebes who should be worshiping them. They believe they got their billions because they are superior people who work harder and deserve to keep every last penny to do with as they choose — and nobody gives them any credit for it.
As Waldman points out, they don’t really live in California in the first place. They live everywhere and in a state of such exalted uniqueness that they no longer have the vaguest idea about the world around them. And then there’s this, which is really galling to those of us who live here:
There’s one more important thing to remember as they whine about the horror of paying a 5% wealth tax: All these tech moguls are exponentially richer than they would otherwise have been because of California, a state that incubated the tech industry, where they were able to take advantage of resources and an expansive community of innovators, entrepreneurs, and funders unavailable elsewhere. If Page and his Google co-founder Sergey Brin had met not at Stanford but at the University of North Dakota, would Grand Forks now be the headquarters of one of the most profitable and influential companies the world has ever seen? Almost certainly not.
Of course, these guys would all say, “California isn’t the same anymore! It’s choking us!” But that’s baloney. Silicon Valley and San Francisco are still the center of the tech world, because innovation still depends on having lots of people interested in the same things in the same place where they can develop ideas together. California is also beautiful and the weather is nice, so people will keep coming there, especially if they can solve the housing affordability problem.
This is correct. They’ve made these threats for years and maybe they’ll follow through this time. But I doubt it. There are reasons why people want to live here that have nothing to do with taxes. I’m sure they’ll keep whining about it though. Complaining about unfairness for the rich man is their new mantra. (And guess who’s made it his brand?)