Rep. Ro Khanna (D-CA), who represents much of Silicon Valley, publicly defended Proposition 40, a California ballot measure that would impose a one-time 5 percent tax on the state’s billionaires, arguing that the ultra-wealthy did not generate their fortunes on their own.
Khanna made the remarks Monday during an appearance on the podcast Conversate with Killer Mike. Proposition 40 would be the first tax of its kind in the country, targeting the assets of more than 200 California billionaires, with the revenue earmarked for the state’s healthcare system.
The measure has drawn opposition from across the political spectrum, including from fellow Democrat Gov. Gavin Newsom, who has warned it could push wealth and wealthy residents out of California. Two competing measures on the same ballot, Propositions 41 and 42, would nullify Proposition 40 if they receive more votes. Proposition 41 would mandate audits of new tax programs, while Proposition 42 would bar new state personal property taxes and certain retroactive taxes.
Host Killer Mike pressed Khanna on how he responds to people who feel they have only recently achieved high earning status and now face a new tax, asking what it is about the 5 percent levy — which would affect roughly 200 people — that has “the public so afraid or scared.”
“Well, the public isn’t afraid. The billionaires are afraid,” Khanna replied, adding that “these billionaires aren’t paying taxes.”
“You make a lot of money, if you do, for a record, or someone makes a lot of money as a lawyer or as an investment banker, and they pay tax — they pay 40 percent, 50 percent, 60 percent tax… [But] this is a whole new form of wealth generation. These are people who get valuations at $32, $33, $40 billion dollar companies, right? And you’ve got $25 trillion of wealth in my district, one-third of the nation’s wealth is in my district and the 50 miles surrounding. And you’ve got 989 billionaires in America, and they’re producing all this wealth, and they’re not paying tax — not because they’re doing anything illegal, [but] because they’re simply sitting on these companies, the companies are growing, and their entire wealth is through the asset appreciation of these companies.”
Khanna said this form of wealth isn’t captured through traditional income reporting. “It’s not through a W2 form. They have no income. And so, what we’re saying is, look, there’s all this new wealth that’s being generated, and there isn’t a way to tax it,” he said. “So, if you tax it 5 percent, we will actually see more people in society benefit from this wealth explosion because you didn’t build this money yourself. I mean, yeah, you were entrepreneurial, you had some genius, you worked hard, but we also had the government basically fund the Internet. We had government fund AI research. We had government fund universities. So why not pay 5 percent? By the way, your wealth has increased 144 percent over the last three years.”
Khanna also took aim at fellow Democrats, including Newsom, who is widely seen as weighing a 2028 presidential run. He said those Democrats avoid backing the measure because “they don’t want to offend these billionaires because they want their money for running for office,” even though he believes many privately support taxing the wealthy.
“And so, it’s really about the Democratic Party. Are we going to be the party of Bernie Sanders and the New Deal, or are we going to still be the corporate Democratic Party?” Khanna said. “That’s what’s going on. This is why this fight matters so much in California.”
Khanna has co-authored similar federal legislation with Sen. Bernie Sanders (I-VT), the “Make Billionaires Pay Their Fair Share Act,” which would impose an annual 5 percent tax on billionaires nationwide.
