Khanna dismisses warnings from tech elites, saying a modest billionaire tax would strengthen democracy, fund healthcare, and sustain innovation.
By AB Wire
California Democrat Ro Khanna has pushed back forcefully against claims that a proposed billionaire wealth tax would drive innovation and entrepreneurs out of the state, arguing instead that shared prosperity is essential to sustaining America’s economic and technological leadership.
Khanna’s comments were sparked by remarks from tech billionaire Peter Thiel, who has suggested he would leave California if the state enacted a temporary wealth tax on billionaires to help fund healthcare amid looming Medicaid cuts. Khanna, an Indian American, responded on X.
Peter Thiel is leaving California if we pass a 1% tax on billionaires for 5 years to pay for healthcare for the working class facing steep Medicaid cuts.
I echo what FDR said with sarcasm of economic royalists when they threatened to leave, “I will miss them very much.” https://t.co/5N8FxBqJww
— Ro Khanna (@RoKhanna) December 27, 2025
“Peter Thiel is leaving California if we pass a 1% tax on billionaires for 5 years to pay for healthcare for the working class facing steep Medicaid cuts,” Khanna wrote on Saturday. “I echo what FDR said with sarcasm of economic royalists when they threatened to leave, ‘I will miss them very much.’”
The congressman was referring to President Franklin D. Roosevelt, who famously dismissed warnings from wealthy industrialists during the New Deal era, to argue that democracy should not be held hostage by concentrated wealth.
A proposed measure called the 2026 Billionaire Tax Act was filed with the California Attorney General’s office in October 2025 and amended in late November. If it qualifies for the ballot, it would appear before voters in the November 2026 election. To get there, proponents must collect roughly 870,000 to 900,000 signatures from registered voters.
Khanna represents California’s 17th Congressional District, which includes much of Silicon Valley — arguably the most powerful economic cluster in the world. In another post, he underscored the scale of wealth and innovation already concentrated in his district.
“My district is $18 trillion, nearly 1/3 of US stock market in a 50 mile radius,” Khanna wrote. “We have 5 companies with a market cap over a trillion dollar companies. If I can stand up for a billionaire tax, this is not a hard position for 434 other members or 100 Senators.”
My district is $18 trillion, nearly 1/3 of US stock market in a 50 mile radius. We have 5 companies with a market cap over a trillion dollar companies. If I can stand up for a billionaire tax, this is not a hard position for 434 other members or 100 Senators.
Those saying that… https://t.co/k7j4TvJARK
— Ro Khanna (@RoKhanna) December 27, 2025
Addressing concerns that a billionaire tax would deter the creation of future tech giants, Khanna rejected what he called a distorted reading of Silicon Valley’s history. He pointed to NVIDIA founder Jensen Huang as an example.
“Those saying that we wouldn’t have a future NVIDIA in the Bay if this tax goes into effect are glossing over Silicon Valley history,” Khanna wrote. “Jensen was at LSI Logic and his co-founders at Sun. He started NVIDIA in my district because of the semiconductor talent, Stanford, innovation networks, and venture funding.”
Khanna emphasized that innovation in the Bay Area is driven by talent density, research institutions, and capital networks — not by the promise of ultra-low taxes on extreme wealth.
“He built here because the talent is here,” Khanna added. “Jensen wasn’t thinking I won’t start this company because I may have to one day pay a 1 percent tax on my billions.”
The Indian American also highlighted the role of public investment in the technologies now generating immense private wealth, particularly in artificial intelligence. He noted that foundational breakthroughs often emerge from publicly funded research.
“AI was created with our tax dollars,” Khanna wrote. “ImageNet was created by Fei-Fei Li at Stanford using NSF money. Hinton presented at an ImageNet conference his famous paper.”
He credited institutions such as the National Science Foundation, DARPA, Stanford, UC Berkeley, San Jose State, Santa Clara University, and the broader University of California system as the backbone of Silicon Valley’s success. That public infrastructure, he argued, is what enabled the U.S. to remain a global innovation leader — including winning five Nobel Prizes in the UC system in a single year.
Khanna acknowledged the critical role of entrepreneurs in commercializing innovation and creating transformative companies. But he rejected the notion that modest taxes on extreme wealth would discourage ambition.
“Yes, we need entrepreneurs to commercialize disruptive innovation,” he wrote. “But the idea that they would not start companies to make billions, or take advantage of an innovation cluster, if there is a 1–2 percent tax on their staggering wealth defies common sense and economic theory.”
He framed the billionaire tax as a response to a deeper national crisis: extreme inequality and declining faith in the American dream.
“We cannot have a nation with extreme concentration of wealth in a few places but where 70 percent of Americans believe the American dream is dead and healthcare, childcare, housing, education is unaffordable,” Khanna warned.
Drawing historical parallels, Khanna argued that unchecked inequality has repeatedly destabilized societies, from the Industrial Revolution in Britain to revolutions in France and Russia. For the U.S., he said, the challenge is ensuring that the AI revolution benefits society broadly rather than a narrow elite.
“America’s central challenge is to make sure the AI revolution works for all of us, not just tech billionaires,” he wrote.
Khanna concluded by turning the innovation argument on its head, asserting that democracy and social cohesion — not tax avoidance — are the true engines of long-term economic success.
“So yes a billionaire tax is good for American innovation,” he wrote, “which depends on a strong and thriving American democracy.”
Thiel is a major supporter of President Trump. In 2016, he was one of the few key Silicon Valley figures to openly support Trump, speaking at the Republican National Convention and donating millions to Trump-aligned causes.
He has funded and mentored several prominent right-wing or populist figures, including Vice President J.D. Vance, Blake Masters, and other candidates skeptical of globalization, immigration, and traditional conservative orthodoxy.