California is experiencing a significant flight of its wealthiest residents, with another major tech billionaire announcing his departure. This trend follows the state's proposed 2026 Billionaire Tax Act, which has sparked fears among founders and innovators.
DoorDash Co-Founder Bids Farewell to Home State
Andy Fang, the billionaire co-founder of the food delivery giant DoorDash, has declared plans to leave California. In a recent post on the social media platform X, Fang pointed directly to the state's controversial wealth tax proposal as his primary reason for leaving. "I love California. Born and raised there. But stupid wealth tax proposals like this make it irresponsible for me not to plan leaving the state," he stated.
Fang's announcement comes on the heels of similar moves by other tech luminaries. Last month, just before the January 1 deadline, Google co-founders Sergey Brin and Larry Page officially relocated their bases out of the Golden State.
The Core Conflict: Targeting 'Class B' Supervoting Shares
The heart of the controversy lies in a specific provision of the tax act that impacts founders who maintain control of their companies. Fang, like the founders of Google and Meta, holds Class B shares. These shares grant him significantly more voting power than standard Class A shares, allowing founders to guide their company's long-term vision.
Fang's post was a response to Y Combinator CEO Garry Tan, who highlighted the issue. Tan explained that Section 50303(c)(3)(C) of the Act creates a problematic rule. It states that for shares with voting control, a taxpayer's ownership percentage will be presumed to be at least equal to their percentage of voting rights, not their actual economic interest.
This means if a founder holds shares representing only 3% of economic interest but 30% of voting control, the tax would value their ownership stake at 30%. "This Class B thing itself could wipe me out," Fang warned in his post, emphasising his commitment to keeping DoorDash founder-led.
A "Legal Trap" Driving Innovation Away?
Both Tan and Fang have criticised the drafting of the proposed law. Tan called it "so poorly written" and described it as a "legal trap." He argued that while the drafters claim it doesn't apply to publicly traded shares, the treatment of Class B voting shares as private ownership suggests otherwise. Tan estimated this provision could effectively lead to a 50% confiscation of a founder's wealth in a single year.
The growing criticism underscores a broader fear within Silicon Valley: that this tax policy is designed to drive tech innovation and its wealthiest creators out of California. As more high-profile figures like Andy Fang make exit plans, the state faces mounting questions about the economic consequences of its proposed wealth tax.
