Business

Billionaire tax proposal sparks soul-searching for Californians

Published

5 days ago

January 7, 2026

Billionaire tax proposal sparks soul-searching for Californians

The fiery debate about a proposed ballot measure to tax California’s billionaires has sparked some soul-searching across the state.

While the idea of a one-time tax on more than 200 people has a long way to go before getting onto the ballot and would need to be passed by voters in November, the tempest around it captures the zeitgeist of angst and anger at the core of California. Silicon Valley is minting new millionaires while millions of the state’s residents face the loss of healthcare coverage and struggle with inflation.

Supporters of the proposed billionaire tax say it is one of the few ways the state can provide healthcare for its most vulnerable. Opponents warn it would squash the innovation that has made the state rich and prompt an exodus of wealthy entrepreneurs from the state.

The controversial measure is already creating fractures among powerful Democrats who enjoy tremendous sway in California. Progressive icon Sen. Bernie Sanders (I-Vt.) quickly endorsed the billionaire tax, while Gov. Gavin Newsom denounced it .

The Golden State’s rich residents say they are tired of feeling targeted. Their success has not only created unimaginable wealth but also jobs and better lives for Californians, they say, yet they feel they are being punished.

“California politics forces together some of the richest areas of America with some of the poorest, often separated by just a freeway,” said Thad Kousser, a political science professor at UC San Diego. “The impulse to force those with extreme wealth to share their riches is only natural, but often runs into the reality of our anti-tax traditions as well as modern concerns about stifling entrepreneurship or driving job creation out of the state.”

The state budget in California is already largely dependent on income taxes paid by its highest earners. Because of that, revenues are prone to volatility, hinging on capital gains from investments, bonuses to executives and windfalls from new stock offerings, and are notoriously difficult for the state to predict.

The tax proposal would cost the state’s richest residents about $100 billion if a majority of voters support it on the November ballot.

Supporters say the revenue is needed to backfill the massive federal funding cuts to healthcare that President Trump signed this summer. The California Budget & Policy Center estimates that as many as 3.4 million Californians could lose Medi-Cal coverage, rural hospitals could shutter and other healthcare services would be slashed unless a new funding source is found.

On social media, some wealthy Californians who oppose the wealth tax faced off against Democratic politicians and labor unions.

An increasing number of companies and investors have decided it isn’t worth the hassle to be in the state and are taking their companies and their homes to other states with lower taxes and less regulation.

“I promise you this will be the final straw,” Jessie Powell, co-founder of the Bay Area-based crypto exchange platform Kraken, wrote on X. “Billionaires will take with them all of their spending, hobbies, philanthropy and jobs.”

Proponents of the proposed tax were granted permission to start gathering signatures Dec. 26 by California Secretary of State Shirley Weber.

The proposal would impose a one-time tax of up to 5% on taxpayers and trusts with assets, such as businesses, art and intellectual property, valued at more than $1 billion. There are some exclusions, including property.

They could pay the levy over five years. Ninety percent of the revenue would fund healthcare programs and the remaining 10% would be spent on food assistance and education programs.

To qualify for the November ballot, proponents of the proposal, led by the Service Employees International Union-United Healthcare Workers West, must gather the signatures of nearly 875,000 registered voters and submit them to county elections officials by June 24.

The union, which represents more than 120,000 healthcare workers, patients and healthcare consumers, has committed to spending $14 million on the measure so far and plans to start collecting signatures soon, said Suzanne Jimenez, the labor group’s chief of staff.

Without new funding, the state is facing “a collapse of our healthcare system here in California,” she said.

U.S. Rep. Ro Khanna (D-Fremont) speaks during a news conference at the U.S. Capitol on Nov. 18.

(Celal Gunes / Anadolu via Getty Images)

Rep. Ro Khanna (D-Fremont) spoke out in support of the tax.

“It’s a matter of values,” he said on X. “We believe billionaires can pay a modest wealth tax so working-class Californians have the Medicaid.”

The Trump administration did not respond to requests for comment.

The debate has become a lightning rod for national thought leaders looking to target California’s policies or the ultra-rich.

On Tuesday, Sanders endorsed the billionaire tax proposal and said he plans to call for a nationwide version.

“This is a model that should be emulated throughout the country, which is why I will soon be introducing a national wealth tax on billionaires,” Sanders said on X. “We can and should respect innovation, entrepreneurship and risk-taking, but we cannot respect the extraordinary level of greed, arrogance and irresponsibility that is currently being displayed by much of the billionaire class.”

But there isn’t unanimous support for the proposal among Democrats.

Notably, Newsom has consistently opposed state-based wealth taxes. He reiterated his opposition when asked about the proposed billionaires’ tax in early December.

“You can’t isolate yourself from the 49 others,” Newsom said at the New York Times DealBook Summit. “We’re in a competitive environment. People have this simple luxury, particularly people of that status, they already have two or three homes outside the state. It’s a simple issue. You’ve got to be pragmatic about it.”

Newsom has opposed state-based wealth taxes throughout his tenure.

In 2022, he opposed a ballot measure that would have subsidized the electric vehicle market by raising taxes on Californians who earn more than $2 million annually. The measure failed at the ballot box, with strategists on both sides of the issue saying Newsom’s vocal opposition to the effort was a critical factor.

The following year, he opposed legislation by a fellow Democrat to tax assets exceeding $50 million at 1% annually and taxpayers with a net worth greater than $1 billion at 1.5% annually. The bill was shelved before the legislature could vote on it.

The latest effort is also being opposed by a political action committee called “Stop the Squeeze,” which was seeded by a $100,000 donation from venture capitalist and longtime Newsom ally Ron Conway. Conservative taxpayer rights groups such as the Howard Jarvis Taxpayers Assn. and state Republicans are expected to campaign against the proposal.

The chances of the ballot measure passing in November are uncertain, given the potential for enormous spending on the campaign — unlike statewide and other candidate races, there is no limit on the amount of money donors can contribute to support or oppose a ballot measure.

“The backers of this proposed initiative to tax California billionaires would have their work cut out for them,” said Kousser at UC San Diego. “Despite the state’s national reputation as ‘Scandinavia by the Sea,’ there remains a strong anti-tax impulse among voters who often reject tax increases and are loath to kill the state’s golden goose of tech entrepreneurship.”

Additionally, as Newsom eyes a presidential bid in 2028, political experts question how the governor will position himself — opposing raising taxes but also not wanting to be viewed as responsible for large-scale healthcare cuts that would harm the most vulnerable Californians.

“It wouldn’t be surprising if they qualify the initiative. There’s enough money and enough pent-up anger on the left to get this on the ballot,” said Dan Schnur, a political communications professor who teaches at USC, Pepperdine and UC Berkeley.

“What happens once it qualifies is anybody’s guess,” he said.

Lorena Gonzalez, president of the California Federation of Labor Unions, called Newsom’s position “an Achilles heel” that could irk primary voters in places like the Midwest who are focused on economic inequality, inflation, affordability and the growing wealth gap.

“I think it’s going to be really hard for him to take a position that we shouldn’t tax the billionaires,” said Gonzalez, whose labor umbrella group will consider whether to endorse the proposed tax next year.

Peter Thiel speaks at the Cambridge Union in 2024.

California billionaires who are residents of the state as of Jan. 1 would be impacted by the ballot measure if it passes . Prominent business leaders announced moves that appeared to be a strategy to avoid the levy at the end of 2025. On Dec. 31, PayPal co-founder Peter Thiel announced that his firm had opened a new office in Miami, the same day venture capitalist David Sacks said he was opening an office in Austin.

Wealth taxes are not unprecedented in the U.S. and versions exist in Switzerland and Spain, said Brian Galle, a taxation expert and law professor at UC Berkeley.

In California, the tax offers an efficient and practical way to pay for healthcare services without disrupting the economy, he said.

“A 1% annual tax on billionaires for five years would have essentially no meaningful impact on their economic behavior,” Galle said. “We’re funding a way of avoiding a real economic disaster with something that has very tiny impact.”

Palo Alto-based venture capitalist Chamath Palihapitiya disagrees. Billionaires whose wealth is often locked in company stakes and not liquid could go bankrupt, Palihapitiya wrote on X.

The tax, he posted, “will kill entrepreneurship in California.”

Business

The rise and fall of the Sprinkles empire that made cupcakes cool

Published

11 hours ago

January 11, 2026

Press Room

The rise and fall of the Sprinkles empire that made cupcakes cool

After the dot-com bubble burst in the early 2000s, Candace Nelson reevaluated her career. She had just been laid off from a boutique investment banking firm in San Francisco’s tech startup scene, and realized she wanted a change.

From her home, she launched a custom cake service that soon morphed into an idea for a cupcake-focused bakery. Nelson and her husband — whom she met at the Bay Area firm where she had worked — then pooled their savings, moved to Southern California and together opened Sprinkles Cupcakes from a 600-square-foot Beverly Hills storefront.

The store quickly sold out on opening day in 2005, and over the next two decades, the Sprinkles brand exploded across the country, opening dozens of locations of its specialty bakeries as well as mall kiosks and its signature around-the-clock cupcake ATMs in several states.

“It was an unproven concept and a big risk,” Nelson told the Times in 2013, at which point the business had 400 employees at 14 locations and dispensed upward of a thousand cupcakes a day from its Beverly Hills ATM alone.

But now, the iconic cupcake brand is no longer.

Sprinkles abruptly shut down all of its locations on Dec. 31, leaving hundreds of retail employees across Arizona; California; Washington, D.C.; Florida; Nevada; Texas; and Utah in a lurch with little notice, no severance and scrambling to fulfill a surge of orders from customers clamoring to get their last tastes.

Candace Nelson, the founder of Sprinkles cupcakes, in Beverly Hills in 2018.

(Mel Melcon / Los Angeles Times)

Although Nelson long ago exited the company, having sold it to private equity firm KarpReilly LLC in 2012, she shared her disappointment with its fate on social media.

“As many of you know, I started Sprinkles in 2005 with a KitchenAid mixer and a big idea,” Nelson said in the post. “It’s surreal to see this chapter come to a close — and it’s not how I imagined the story would unfold.”

The company, now headquartered in Austin, Texas, made no formal announcement regarding the closures and Nelson has not said more than what she posted online. The company did share a comment with KTLA, saying “After thoughtful consideration, we’ve made the very difficult decision to transition away from operating company-owned Sprinkles bakeries.” Neither Nelson nor representatives of Sprinkles and KarpReilly responded to The Times’ requests for comment.

Sprinkles’ demise comes at a tough time for the food and beverage industry. At brick-and-mortar food retail locations, the non-negotiable ingredient and labor costs can be high. And shifting consumer sentiments away from sugar-filled sweets and toward more healthy and functional options, strained pocketbooks, as well as pushes by federal and state governments to nix artificial colors and flavoring, are creating uncertainties for businesses, those in the food industry said.

A 24-hour cupcake ATM at Sprinkles Cupcakes in Beverly Hills in 2012.

“Over the last 10 years the consumer has wizened up tremendously and is looking at the back of the label and choosing where to spend their sweets,” said David Jacobowitz, founder of Austin-based Nebula Snacks, an online food retailer.

At the same time, it’s also not uncommon for businesses owned by private-equity firms to close on a whim, where relentlessly profit-driven decisions might be made simply to pursue more lucrative projects. In recent years, private-equity deals have been seen to milk businesses for profit by slashing costs and quality, and have appeared to play a role in the breakup of some legacy retail brands, including Toys ‘R’ Us, Red Lobster, TGI Fridays and fabrics chain JoAnn Inc. On the flip side, private equity can help infuse much-needed cash into a business and extend its life.

Stevie León and her co-workers received a text the night before New Year’s Eve informing them the franchise Sprinkles location in Sarasota, Fla., where they worked would close permanently after their shifts the next day.

León, 33, said her position as a scratch baker mixing batter and frosting cupcakes overnight had been a dream job, since she had been searching for ways to develop baking skills without paying for expensive schooling.

“I really thought it was my forever job and it was taken away literally in a day,” she said. “I’m just taking it one day at a time.”

Ivy Hernandez, 27, the general manager at the Sarasota store, said that after the news was delivered to her boss, the franchise owner, they rushed to learn their options to keep the store afloat but quickly learned it could be legally precarious to continue operating. The store had been open less than a year.

A nearby corporate store, Hernandez said, had been in disarray for months, with employees contending with broken fridges and lapsed ingredient shipments, as managers implored higher-ups to pay the bills so the business could operate properly.

“It really felt like they were trying to do everything they could to screw everyone over as hard as possible until the end,” Hernandez said.

Sprinkles did not respond to questions about the franchise program or allegations of mismanagement in the lead-up to the closure.

A person walks by Sprinkles on the Upper East Side in New York City in 2020.

The obsession with tiny cakes in paper cups traces back to an episode of “Sex and the City” aired in 2000 showing Miranda and Carrie savoring cupcakes on a bench outside a West Village bakery called Magnolia’s Cupcakes.

“Big wasn’t a crush, he was a crash,” Carrie says to Miranda as she peels down the wrapper on a cupcake topped with bright pink buttercream frosting. She punctuates the quip by taking a big bite, leaving a glob of frosting on her face.

The scene sparked a tourism phenomenon for the bakery — which went on to create a “Carrie” line of cupcakes — and helped propel the burgeoning cupcake industry and companies like Sprinkles Cupcakes, Crumbs Bake Shop and Baked by Melissa to new heights.

Within a decade there was already talk of a “Cupcake Bubble,” coined by writer Daniel Gross in a 2009 Slate article where he argued that the 2008 economic recession laid the groundwork for a proliferation of cupcake stores across America, because a lot of people could figure out how to make tasty cupcakes cheaply and scale up without a huge capital investment.

Amid the decimation of many other local retail businesses, one could take over storefronts in heavily trafficked areas for cheap. As a result, “casual baking turned into an urban industry,” Gross said.

The cupcake fervor hit its peak when Crumbs, which had started as a single bakery on Manhattan’s Upper West Side in 2003, went public in a reverse merger worth $66 million in 2011. The wildly popular mini-cakes were selling at $4.50 a pop. But it became clear very quickly that it had grown too large, too fast. It closed in 2014 after it lost its stock listing on Nasdaq and defaulted on about $14.3 million in financing.

Analysts at the time said consumers were cooling on opulent desserts and suggested tougher times were ahead for bakeries that focused solely on cupcakes.

But Baked by Melissa has thus far proved those analysts wrong. The company has remained privately owned, and according to its founder, is focused on nationwide e-commerce operations — and on expanding the brand beyond sweets. Founder Melissa Ben-Ishay has gained a following on social media by sharing recipes for nutritious, easy-to-make meals.

“Businesses that prioritize quick value increases to get acquired often crash,” Ben-Ishay told Forbes last year. “We’re committed to maintaining product quality and steady, long-term growth.”

Before its unceremonious and sudden closure, Spinkles company leadership had pushed to diversify its business as part of a strategy to recover from a pandemic-era lull.

Chief Executive Dan Mesches told trade publication Nation’s Restaurant News in 2021 that comparable sales had grown since pre-pandemic years. He said the company had ramped up its direct-to-consumer and off-premises offerings and created a line of chocolates made to look like the tops of their cupcakes. The company also introduced a new franchise program with the goal of opening some 200 locations in the U.S. and abroad over three years.

“Innovation is everything for us,” Mesches said.

Sprinkles was known for, among other things, inventive and somewhat corny methods of customer delivery. Besides the trademark ATMs, the company’s vending machines found at many airports made loud, attention-drawing jingles, drawing dramatic complaints and jokes from TikTok travelers. In the 2010s, the company debuted a custom-built truck — “the Sprinklesmobile” — to deliver cupcakes to cities without physical locations.

Frances Hughes, co-founder of online wholesale marketplace Starch, said there’s no question that gourmet sweet treats are still in vogue. But brick-and-mortar locations are much more risky, with more unpredictability. Having large fixed costs makes a business “extremely sensitive to small changes in traffic or frequency,” while online or e-commerce models can be more flexible.

“I think cupcakes as a product still have demand. But the novelty paths that support that rapid retail expansion have passed,” Hughes said.

When Nelson, the Sprinkles founder, posted her somber message about the closure, she asked people to share memories of the company. Many offered heartfelt responses, her comments flooded with stories, for example, of poor college students making the trek to the Beverly Hills location for a limited number of first-come, first-served free cupcakes.

But many of the comments also criticized Nelson’s sale to private equity.

“You sold it to PE and expected it to not close?? What planet are you living on? I don’t begrudge you for selling as that’s entirely your choice but to think any PE firm cares about a company in the slightest is insanity,” one Instagram user said.

Nicole Rucker, an L.A.-based pastry chef and owner of Fat+Flour Pie Shop, said she didn’t observe a decline in the quality of the product after the private-equity takeover. She has been a longtime admirer of the company, driving up from San Diego to sample the cupcakes when its store opened. The simple attractiveness of the box and the logo, and the consistency in the way cupcakes were decorated, “was inspiring,” she said.

“It had a strong hold on people for years,” Rucker said.

Rucker said however that when a private-equity-owned business shutters, she doesn’t feel sadness: “I would rather give my money to a fellow small-business owner, because I would rather know that every dollar and every sale matters.”

Michelle Wainwright, the owner and founder of Indiana-based bakery Cute as a Cupcake! said that although the niche cupcake industry may no longer be in its heyday — with “Sex and the City” no longer airing and competitive baking show “Cupcake Wars” (which Candace Nelson served as a judge on) now canceled — they are still versatile treats, with great potential for creativity.

And they are sentimental to her, because she uses her grandmother’s recipe.

“Cupcakes are still a winner,” Wainwright said. “It’s my belief that a life with out cupcakes is a life without love.”

Business

Bay Area semiconductor testing company to lay off more than 200 workers

Published

23 hours ago

January 11, 2026

Press Room

Bay Area semiconductor testing company to lay off more than 200 workers

Semiconductor testing equipment company FormFactor is laying off more than 200 workers and closing manufacturing facilities as it seeks to cut costs after being hit by higher import taxes.

The Livermore, Calif.,-based company plans to shutter its Baldwin Park facility and cut 113 jobs there on Jan. 30, according to a layoff notice sent to the California Employment Development Department this week. Its facility in Carlsbad is scheduled to close in mid-December later this year, which will result in 107 job losses, according to an earlier notice.

Technicians, engineers, managers, assemblers and other workers are among those expected to lose their jobs, according to the notices.

The company offers semiconductor testing equipment, including probe cards, and other products. The industry has been benefiting from increased AI chip adoption and infrastructure spending.

FormFactor is among the employers that have been shedding workers amid more economic uncertainty.

Companies have cited various reasons for workforce reductions, including restructuring, closures, tariffs, market conditions and artificial intelligence, which can help automate repetitive tasks or generate text, images and code.

The tech industry — a key part of California’s economy — has been hit hard by job losses after the pandemic, which spurred more hiring, and amid the rise of AI tools that are reshaping its workforce.

As tech companies and startups compete fiercely to dominate the AI race, they’ve also cut middle management and other workers as they move faster to release more AI-powered products. They’re also investing billions of dollars into data centers that house computing equipment used to process the massive troves of information needed to train and maintain AI systems.

Companies such as chipmaker Nvidia and ChatGPT maker OpenAI have benefited from the AI boom, while legacy tech companies such as Intel are fighting to keep up.

FormFactor’s cuts are part of restructuring plans that “are intended to better align cost structure and support gross margin improvement to the Company’s target financial model,” the company said in a filing to the U.S. Securities and Exchange Commission this week.

The company plans to consolidate its facilities in Baldwin Park and Carlsbad, the filing said.

FormFactor didn’t respond to a request for comment.

FormFactor has been impacted by tariffs and seen its growth slow. The company employs more than 2,000 people and has been aiming to improve its profit margins.

In October, the company reported $202.7 million in third-quarter revenue, down 2.5% from the third quarter of fiscal 2024. The company’s net income was $15.7 million in the third quarter of 2025, down from $18.7 million in the same quarter of the previous year.

FormFactor’s stock has been up 16% since January, surpassing more than $67 per share on Friday.

Business

In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

Published

1 day ago

January 10, 2026

Press Room

In-N-Out Burger outlets in Southern California hit by counterfeit bill scam

Two people allegedly used $100 counterfeit bills at dozens of In-N-Out Burger restaurants in Southern California in a wide-reaching scam.

Glendale Police officials said in a statement Friday that 26-year-old Tatiyanna Foster of Long Beach was taken into custody last month. Another suspect, 24-year-old Auriona Lewis, also of Long Beach, was arrested in October.

Police released images of $100 bills used to purchase a $2.53 order of fries and a $5.93 order of a Flying Dutchman.

The Los Angeles County District Attorney’s Office charged Lewis with felony counterfeiting and grand theft in November.

Elizabeth Megan Lashley-Haynes, Lewis’s public defender, didn’t immediately respond to a request for comment.

Glendale police said that Lewis was arrested in Palmdale in an operation involving the U.S. Marshals Task Force. Foster is expected in court later this month, officials said.

”Lewis was found to be in possession of counterfeit bills matching those used in the Glendale incident, along with numerous gift cards and transaction receipts believed to be connected to similar fraudulent activity,” according to a police statement.

A representative for In-N-Out Burger told KTLA-TV that restaurants in Riverside, San Bernardino and San Diego counties were also targeted by the alleged scam.

“Their dedication and expertise resulted in the identification and apprehension of the suspects, helping to protect our business and our communities,” In-N-Out’s Chief Operations Officer Denny Warnick said. “We greatly value the support of law enforcement and appreciate the vital role they play in making our communities stronger and safer places to live.”

The company, opened in 1948 in Baldwin Park, has restaurants in nine states.

An Oakland location closed in 2024, with the owner blaming crime and slow police response times.

Company chief executive Lynsi Snyder announced last year that she planned to relocate her family to Tennessee, although the burger chain’s headquarters will remain in California.