The wealth tax initiative is drafted to be highly punitive by including large Roth IRAs and negating the benefits of complex trust structures typically used for tax avoidance. This makes it extremely difficult for wealthy individuals to escape its reach if passed.

A provision in the proposed California wealth tax calculates an individual's net worth not by the market value of their shares, but by multiplying their voting power by the company's total market cap. This disproportionately affects founders with super-voting stock, like those of Google.

A controversial feature of the proposed California billionaire tax is its retroactive application. The tax would affect anyone who was a billionaire resident at the start of the year, even if the law passes months later. This legal mechanism is designed to stop wealthy individuals from moving their assets out of state before the vote occurs.

California is on the verge of a massive tax revenue surge from upcoming IPOs of companies like SpaceX and OpenAI. However, a proposed wealth tax on illiquid assets is causing tech leaders to relocate, potentially costing the state the very economic boom it needs to balance its budget.

Congressman Ro Khanna proposes a tax on the total net worth of individuals with over $100 million. Unlike an income or capital gains tax, this targets unrealized wealth, forcing the liquidation of assets like stocks to generate the cash needed to pay the tax.

A proposed wealth tax in California triggered a significant flight of capital and high-net-worth individuals, even without becoming law. The key factor was the failure of politicians to uniformly condemn the proposal, which was perceived as a threat to fundamental property rights, signaling a hostile business climate.

Ben Horowitz warns against wealth taxes on unrealized gains by citing Norway's experience. The policy required founders to pay taxes on their private company's rising valuation with illiquid stock, leading to an exodus of entrepreneurs and effectively dismantling the local tech ecosystem.

The proposed tax on billionaires' assets isn't about the billionaires themselves, who hold a fraction of national wealth. The real goal is to establish the legal precedent for a private property tax. Once normalized, this mechanism can be extended to the middle class, where the vast majority of assets reside.

The proposed wealth tax applies to illiquid assets. A founder of a highly-valued private AI startup could be deemed a 'billionaire' and face a massive tax bill on paper wealth, even if their company never exits or ultimately sells for a much lower price, creating a huge financial risk.