"I don't understand why the billionaires just aren't calling good tax lawyers," he told The San Francisco Standard this week. Gamage insists founders wouldn't be forced to sell. Those with most of their wealth in private stock could open a deferral account for assets they don't want taxed immediately - California would instead take 5% whenever those shares are eventually sold."
"Take Larry Page, who about 3% of Google but controls roughly 30% of its voting power through dual-class stock. Under this proposal, he'd owe taxes on that 30%. For a company valued in the hundreds of billions, that's a lot more than a rounding error. The Post reports that one SpaceX alumni founder building grid technology would face a tax bill at the Series B stage of the company that would wipe out his entire holdings."
The proposed wealth tax would tax founders on voting-control shares rather than actual equity ownership, often producing assessments far larger than percent ownership. Dual-class stock structures can make voting power far exceed economic stake, and using a voting-control formula can dramatically increase taxable wealth. Founders of private startups could face large tax bills even before liquidity events, with one example showing a Series B founder's holdings wiped out by the assessment. The drafter says deferral accounts and certified-appraisal alternatives would be available and failed startups would owe nothing. Valuing private companies is inherently difficult and appraisals can vary widely.
Read at TechCrunch
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