Reid Hoffman Slams California Billionaire Tax

Reid Hoffman, the cofounder of LinkedIn, has strongly opposed California's proposed billionaire tax, describing the legislation as 'horrendous' for innovation. In a recent social media post, Hoffman detailed his conversation with Representative Mo Khanna, stating that the proposed wealth tax is 'badly designed' and contains 'massive flaws' that could negatively impact the state's economy.

The proposal suggests a 5% tax on billionaires residing in California. Hoffman argues that poorly designed tax structures incentivize avoidance and capital flight, ultimately resulting in lower revenue for the state. While Hoffman supports the preservation of Silicon Valley's economic engine, he believes the current tax proposal fails to address wealth inequality effectively. The debate highlights a deep division within the tech community, with some industry leaders supporting the tax while others take steps to mitigate its impact.

Reid Hoffman has articulated specific objections to California's proposed wealth tax following a discussion with Representative Mo Khanna. Hoffman took to X to voice his concerns, stating that the proposal is fundamentally flawed. He emphasized that the tax would be 'horrendous' for innovation, a key driver of the state's economy.

Hoffman highlighted the complexity of the proposal, noting that it cannot be fully addressed in a simple social media post. He specifically pointed to the taxation of illiquid stock as a critical error. According to Hoffman, this approach creates significant problems for taxpayers and the state alike.

The LinkedIn cofounder warned that such measures often lead to unintended consequences. He stated, "Poorly designed taxes incentivize avoidance, capital flight, and distortions that ultimately raise less revenue." This suggests that the tax could fail to achieve its revenue goals while damaging the local economic environment.

The conversation between Reid Hoffman and Rep. Mo Khanna revealed a shared desire to support Silicon Valley, albeit through different methods. Hoffman noted that Khanna reached out to discuss the tax, which would impose a 5% levy on the state's billionaires. After their exchange, Hoffman expressed optimism regarding Khanna's intentions toward the tech sector.

Hoffman wrote that he believes Khanna views Silicon Valley as 'a massively important creation of the future.' He added that the congressman aims to 'preserve and evolve capitalism' through the proposed tax legislation. However, Hoffman remains convinced that the current design of the tax is counterproductive.

In a separate post, Rep. Khanna validated the exchange. He wrote that he appreciated 'the excellent dialogue' with Hoffman and confirmed that Hoffman had 'summarized my goal and aspiration correctly!' This indicates a mutual respect between the two, even as they disagree on the specific policy mechanism.

The proposed billionaire tax has created a clear split among tech industry leaders. Reid Hoffman stands firmly against it, but he is not alone in his criticism. Conversely, other high-profile figures have publicly supported the measure, creating a complex political landscape for the legislation.

Support for the tax includes Nvidia's Jensen Huang, who has reportedly come out in favor of the proposal. However, the opposition is equally vocal. The potential for increased taxation has already prompted some wealthy individuals to take preemptive action.

Reports indicate that Google's Larry Page moved several of his assets and businesses out of California before an end-of-2025 deadline. This deadline was critical because it would have risked exposing him to the proposed tax. This migration of assets underscores the high stakes involved in the legislative debate.

The debate over California's proposed billionaire tax remains highly contentious, centering on the balance between generating revenue and preserving economic innovation. Reid Hoffman's vocal opposition highlights the concerns of many in the tech sector who fear that 'badly designed' taxes could drive capital out of the state. His specific critique regarding the taxation of illiquid stock suggests that the proposal may need significant revision to avoid unintended economic distortions.

While Rep. Mo Khanna seeks to address wealth inequality and support the working class, the reaction from Silicon Valley indicates a potential risk to the region's economic stability. As industry leaders remain split—ranging from Jensen Huang's support to Larry Page's asset relocation—the outcome of this legislative effort will likely depend on whether a compromise can be reached that satisfies both fiscal goals and innovation concerns.