Six California billionaires already fled the state before Prop 40 even passed.
Now Congressman Ro Khanna wants to make the ones who stayed pay 5% of everything they own.
But Mark Cuban just hit Ro Khanna with a brutal reality check that left Democrats squealing.
Khanna Wanted a Fight and Cuban Gave Him One
Cuban didn't hold back on X this weekend.
Khanna posted a video defending Proposition 40 – the ballot measure that would hit California residents worth over $1 billion with a one-time 5% tax on their total wealth, not just income, but stocks, private company shares, everything.
His pitch was simple: this pays for healthcare for working Californians.
Cuban shot back with something Khanna hadn't considered: startup founders who are worth $1 billion on paper don't have $50 million sitting in a checking account.
They're cash poor and stock rich.
A founder who spent a decade building a company, created thousands of jobs, and paid $250 million in federal and state taxes along the way might still have no liquid cash to hand California.
Cuban made it concrete: "If this passes, only idiot startup founders stay in Cali."
He went further – threatening to blacklist California from future investments entirely.
"I will make NOT being in California a pre requisite for an investment," Cuban wrote.
Khanna's response was to propose that California lend founders the money to pay California's own tax.
Cuban had four words: "Ro, that's insane."
He walked through the logic: California lends a founder $50 million, the founder immediately hands it back as tax payment, California collects zero new revenue – and now potentially owns a stake in a private startup if the loan goes unpaid.
"Cali, You make it. We take it!" Cuban wrote.
When Khanna pivoted to polling – arguing that ordinary Americans want higher taxes on billionaires – Cuban delivered the line of the exchange.
"You don't understand business Ro," he wrote.
The Exodus Already Happened
The billionaires aren't waiting for November.
Peter Thiel left.
Travis Kalanick left.
Larry Page left.
Sergey Brin left.
Six of California's estimated 214 billionaires departed before the January 1, 2026 tax obligation date.
According to venture capitalist Chamath Palihapitiya, roughly $1 trillion in billionaire wealth has already exited the state – and that wealth took income taxes, sales taxes, real estate taxes, and thousands of employee paychecks with it.
That's not wealth that might leave.
https://twitter.com/WesternLensman/status/2088979004350922856?s=20
That's wealth that's gone.
Steve Moore, co-founder of Unleash Prosperity, put it plainly: California's tax base took a massive hit before a single vote was cast, with Silicon Valley billionaires running to Florida and Texas for lower taxes and economic freedom.
Y Combinator CEO Garry Tan flagged something even more devastating: the way Prop 40 treats voting control of shares could turn a 5% tax into a $60 billion bill for a single founder.
The tax as written doesn't just hurt billionaires – it makes founder-led companies practically illegal in California.
Newsom, for once, agrees – and his reasoning tells you everything.
He opposes Prop 40 because it directs too much money to healthcare and not enough to his other priorities.
Not because it's wrong to confiscate wealth from job creators.
Not because it will torch the innovation economy his state built over fifty years.
Because he doesn't control where the money goes.
Here's the part the media won't tell you: Newsom is simultaneously calling for a version of the same tax at the national level.
He doesn't think the policy is wrong.
He thinks California shouldn't do it first – because billionaires can flee to Texas, but they can't flee America.
That's not a principle.
That's a trap.
California Built the Most Valuable Innovation Economy in Human History – and Is Voting to Destroy It
The founders who built California's economy didn't take money out.
They reinvested it, hired people, paid wages, and generated the payroll taxes that actually fund the state government year after year.
https://twitter.com/FoxBusiness/status/2089163128479129637?s=20
Prop 40 punishes exactly that behavior.
It says: if you kept building instead of cashing out, we're coming for what you built.
Cuban called it "the biggest f— you in the history of entrepreneurship."
He's right.
The people who get hurt aren't just billionaires.
They're the thousands of employees who work at those companies, the suppliers who depend on those contracts, and the communities that built their tax base around those jobs.
Khanna wants one check.
California is going to lose a generation of paychecks to get it.
Sources:
- Michael Sinkewicz, "Mark Cuban tells Ro Khanna 'you don't understand business,' threatens investment shift over billionaire tax," Fox Business, August 16, 2026.
- "2026 California Proposition 40," Wikipedia, August 2026.
- "California Wealth Tax Is Pushing People Out of the State," Americans for Tax Reform, January 2026.
- Amanda Macias, "Tax fight puts California on collision course as billionaires leave for red states," Fox News, January 14, 2026.
- "California's Billionaires Tax Is Imploding," AMAC, July 14, 2026.
- "California Proposition 40: Is CA Wealth Tax Constitutional?" Tax Foundation, August 2026.