In a significant move, Google co-founders Sergey Brin and Larry Page have officially changed their primary residence from California, successfully moving before a proposed "wealth tax" targeting the state's ultra-rich could take effect. This pre-emptive exit highlights a growing tension between California's tax policies and its most successful tech entrepreneurs.
The $60 Billion Tax Bill That Forced an Exit
Garry Tan, the CEO of the prominent startup accelerator Y Combinator, took to social media platform X to explain the staggering financial rationale behind the founders' departure. He argued that the structure of the proposed tax would create a "legal trap" for founders holding special supervoting shares, like Brin and Page.
Each founder owns approximately 3% of Alphabet's stock, valued at around $120 billion based on the company's near $4 trillion market capitalization. However, their Class B shares carry 10 times the voting power of regular shares. According to Tan, the controversial provision in the 2026 Billionaire Tax Act would treat this voting control as economic ownership for taxation.
"The SEIU-UHW California billionaire tax would treat them as owning 30% of Alphabet (3% × 10 = 30%). That means each founder's taxable wealth would be calculated at $1.2 trillion," Tan stated. A 5% wealth tax on that inflated figure would result in a colossal $60 billion tax bill for each founder, effectively wiping out half of their actual Alphabet holdings.
Decoding the Controversial Tax Clause
The core of the dispute lies in Section 50303(c)(3)(C) of the proposed Act. The clause states that for assets conferring voting or direct control rights, the taxpayer's ownership percentage for tax purposes will be presumed to be no less than their percentage of overall voting rights.
This means the law ignores the separation between economic interest and voting control, a common structure in tech companies designed to keep founders in charge. "For any interests that confer voting or other direct control rights, the percentage of the business entity owned by the taxpayer shall be presumed to be not less than the taxpayer's percentage of the overall voting or other direct control rights," the section reads.
Tan criticizes the law as "poorly written" and "dishonest," claiming that while its drafters say it doesn't apply to public shares, they designed it to treat Class B supervoting shares as private holdings to maximize tax collection.
A Warning Bell for California's Tech Ecosystem
Tan further amplified his critique by pointing to language in the tax act that instructs it to be "liberally construed to effectuate its purposes." He interprets this as a directive to "capture as much tax as possible" from California's billionaires.
The departure of Brin and Page, two of the state's most iconic tech pioneers, is seen by many in the industry as a stark warning. It underscores fears that such tax policies could drive innovation and wealth out of California. While some executives, like Nvidia's Jensen Huang, have expressed no issue with wealth taxes, the exodus of Google's founders signals a potentially damaging precedent for the state's ability to retain its top tech talent and founders.
The move sets the stage for a broader debate on wealth taxation, corporate structure, and the long-term economic future of California as the world's premier tech hub.
