Business
Commentary: Yes, California should tax billionaires’ wealth. Here’s why
That shrill, high-pitched squeal you’ve been hearing lately? Don’t bother trying to adjust your TV or headphones, or calling your doctor for a tinnitis check. It’s just America’s beleaguered billionaires keening over a proposal in California to impose a one-time wealth tax of up to 5% on fortunes of more than $1 billion.
The billionaires lobby has been hitting social media in force to decry the proposed voter initiative, which has only started down the path toward an appearance on November’s state ballot. Supporters say it could raise $100 billion over five years, to be spent mostly on public education, food assistance and California’s medicaid program, which face severe cutbacks thanks to federal budget-cutting.
As my colleagues Seema Mehta and Caroline Petrow-Cohen report, the measure has the potential to become a political flash point.
The rich will scream The pundits and editorial-board writers will warn of dire consequences…a stock market crash, a depression, unemployment, and so on. Notice that the people making such objections would have something personal to lose.
— Donald Trump advocating a wealth tax, in 2000
Its well-heeled critics include Jessie Powell, co-founder of the Bay Area-based crypto exchange platform Kraken, who warned on X that billionaires would flee the state, taking with them “all of their spending, hobbies, philanthropy and jobs.”
Venture investor Chamath Palihapitiya claimed on X that “$500 billion in wealth has already fled the state” but didn’t name names. San Francisco venture investor Ron Conway has seeded the opposition coffers with a $100,000 contribution. And billionaire Peter Thiel disclosed on Dec. 31 that he has opened a new office in Miami, in a state that not only has no wealth tax but no income tax.
Already Gov. Gavin Newsom, a likely candidate for the Democratic nomination for president, has warned against the tax, arguing that it’s impractical for one state to go it alone when the wealthy can pick up and move to any other state to evade it.
On the other hand. Rep. Ro Khanna (D-Fremont), usually an ally of Silicon Valley entrepreneurs, supports the measure: “It’s a matter of values,” he posted on X. “We believe billionaires can pay a modest wealth tax so working-class Californians have Medicaid.”
Not every billionaire has decried the wealth tax idea. Jensen Huang, the CEO of the soaring AI chip company Nvidia — and whose estimated net worth is more than $160 billion — expressed indifference about the California proposal during an interview with Bloomberg on Tuesday.
“We chose to live in Silicon Valley and whatever taxes, I guess, they would like to apply, so be it,” he said. “I’m perfectly fine with it. It never crossed my mind once.”
And in 2000, another plutocrat well known to Americans proposed a one-time tax of 14.25% on taxpayers with a net worth of $10 million or more. That was Donald Trump, in a book-length campaign manifesto titled “The America We Deserve.”
“The rich will scream,” Trump predicted. “The pundits and editorial-board writers will warn of dire consequences … a stock market crash, a depression, unemployment, and so on. Notice that the people making such objections would have something personal to lose.” (Thanks due to Tim Noah of the New Republic for unearthing this gem.)
Trump’s book appeared while he was contemplating his first presidential campaign, in which he presented himself as a defender of the ordinary American. His ghostwriter, Dave Shiflett, later confessed that he regarded the book as “my first published work of fiction.”
All that said, let’s take a closer look at the proposed initiative and its backers’ motivation. It’s gaining nationwide attention because California has more billionaires than any other state.
The California measure’s principal sponsor, the Service Employees International Union, and its allies will have to gather nearly 875,000 signatures of registered voters by June 24 to reach the ballot. The opposition is gearing up behind the catchphrase “Stop the Squeeze” — an odd choice for a rallying cry, since it’s hard to imagine the average voter getting all het up about multibillionaires getting squoze.
The measure would exempt directly held real estate, pensions and retirement accounts from the calculation of net worth. The tax can be paid over five years (with a fee charged for deferrals). It applies to billionaires residing in California as of Jan. 1, 2026; their net worth would be assessed as of Dec. 31 this year. The measure’s drafters estimate that about 200 of the wealthiest California households would be subject to the tax.
The initiative is explicitly designed to claw back some of the tax breaks that billionaires received from the recent budget bill passed by the Republican-dominated Congress and signed on July 4 by President Trump. The so-called One Big Beautiful Bill Act will funnel as much as $1 trillion in tax benefits to the wealthy over the next decade, while blowing a hole in state and local budgets for healthcare and other needs.
California will lose about $19 billion a year for Medi-Cal alone. According to the measure’s drafters, that could mean the loss of Medi-Cal coverage for as many as 1.6 million Californians. Even those who retain their eligibility will have to pay more out of pocket due to provisions in the budget bill.
The measure’s critics observe that wealth taxes have had something of a checkered history worldwide, although they often paint a more dire picture than the record reflects. Twelve European countries imposed broad-based wealth taxes as recently as 1995, but these have been repealed by eight of them.
According to the Tax Foundation Europe, that leaves wealth taxes in effect only in Colombia, Norway, Spain and Switzerland. But that’s not exactly correct. Wealth taxes still exist in France and Italy, where they’re applied there to real estate as property taxes, and in Belgium, where they’re levied on securities accounts valued at more than 1 million euros, or about $1.16 million.
Switzerland’s wealth tax is by far the oldest, having been enacted in 1840. It’s levied annually by individual cantons on all residents, at rates reaching up to about 1% of net worth, after deductions and exclusions for certain categories of assets.
The European countries that repealed their wealth taxes did so for varied reasons. Most were responding at least partially to special pleading by the wealthy, who threatened to relocate to friendlier jurisdictions in a continent-wide low-tax contest.
That’s the principal threat raised by opponents of the California proposal. But there are grounds to question whether the effect would be so stark. For one thing, notes UC Berkeley economist Gabriel Zucman, an advocate of wealth taxes generally, “it has become impossible to avoid the tax by leaving the state.” Billionaires who hadn’t already established residency elsewhere by Jan. 1 this year have missed a crucial deadline.
The initiative’s drafters question the assumption that millionaires invariably move from high- to low-tax jurisdictions, citing several studies, including one from 2016 based on IRS statistics showing that elites are generally unwilling to move to exploit tax advantages across state lines.
As for the argument that billionaires could avoid the tax by moving assets out of the state, “the location of the assets doesn’t matter,” Zucman told me by email. “Taxpayers would be liable for the tax on their worldwide assets.”
One issue raised by the burgeoning controversy over the California proposal is how to extract a fair share of public revenue from plutocrats, whose wealth has surged higher while their effective tax rates have declined to historically low levels.
There can be no doubt that in tax terms, America’s wealthiest families make out like bandits. The total effective tax rate of the 400 richest U.S. households, according to an analysis by Zucman, his UC Berkeley colleague Emmanuel Saez, and their co-authors, “averaged 24% in 2018-2020 compared with 30% for the full population and 45% for top labor income earners.” This is largely due to the preferences granted by the federal capital gains tax, which is levied only when a taxable asset is sold and even then at a lower rate than the rate on wage income.
The late tax expert at USC, Ed Kleinbard, used to describe the capital gains tax as our only voluntary tax, since wealthy families can avoid selling their stocks and bonds indefinitely but can borrow against them, tax-free, for funds to live on; if they die before selling, the imputed value of their holdings is “stepped up” to their value at their passing, extinguishing forever what could be decades of embedded tax liabilities. (The practice has been labeled “buy, borrow, die.”)
Californians have recently voted to redress the increasing inequality of our tax system. Voters approved what was dubbed a “millionaires tax” in 2012, imposing a surcharge of 1% to 3% on incomes over $263,000 (for joint filers, $526,000). In 2016, voters extended the surcharge to 2030 from the original phase-out date of 2016. That measure passed overwhelmingly, by a 2-to-1 majority, easily surpassing that of the original initiative.
But it may be that California’s ability to tax billionaires’ income has been pretty much tapped out. Some have argued that one way to obtain more revenue from wealthy households is to eliminate any preferential rate on capital gains and other investment income, but that’s not an option for California, since the state doesn’t offer a preferential tax rate on that income, unlike the federal government and many other states. The unearned income is taxed at the same rate as wages.
One virtue of the California proposal is that, even if it fails to get enacted or even to reach the ballot, it may trigger more discussion of options for taxing plutocratic fortunes. One suggestion came from hedge fund operator Bill Ackman, who reviled the California proposal on X as “an expropriation of private property” (though he’s not a California resident himself), but acknowledged that “one shouldn’t be able to live and spend like a billionaire and pay no tax.”
Ackman’s idea is to make loans backed by stock holdings taxable, “as if you sold the same dollar amount of stock as the loan amount.” That would eliminate the free ride that investors can enjoy by borrowing against their holdings.
The debate over the California wealth tax may well hinge on delving into plutocrat psychology. Will they just pay the bill, as Huang implies would be his choice? Or relocate from California out of pique?
California is still a magnet for the ambitious entrepreneur, and the drafters of the initiative have tried to preserve its allure. Those who come into the state after Jan. 1 to pursue their ambitious dreams of entrepreneurship would be exempt, as would residents whose billion-dollar fortunes came after that date. There may be better ways for California to capture more revenue from the state’s population of multibillionaires, but a one-time limited tax seems, at this moment, to be as good as any.
Business
Waymo reports teen riders for bad behavior and delivers them to the police
Robotaxis could be turning into robocops.
A self-driving Waymo reported two teens to San Mateo, Calif., police on Monday after they were found drinking alcohol and shooting toy guns in the back of the vehicle.
According to a social media post from the San Mateo Police Department, officers detained two 15-year-olds after the Waymo they were riding in contacted the department and stopped in a parking lot until law enforcement arrived.
“Parents do you know where your teens are?” the San Mateo Police Department wrote on Facebook following the incident. “Waymo does!”
Officers removed both teens from the vehicle and determined they were using toy guns to shoot Orbeez out the windows. Orbeez are small, water-absorbing beads sold at toy stores.
“Toy guns, water guns, and BB guns all pose real dangers, especially to an untrained eye,” the Police Department said. “The simple handling of them can cause fear in [passersby].” “
A video posted on Facebook shows at least five officers and a police dog responding to the scene and approaching the Waymo with their weapons raised.
Waymo did not immediately respond to a request for comment.
Waymo vehicles have internal cameras and microphones that may be used in an emergency or to “promote safety and security,” according to Waymo’s online support page.
The cameras are also used to ensure the vehicles are clean and to help find lost items, according to the support page.
The company said it does not use facial recognition or other biometric identification technologies to identify individuals.
“In more urgent circumstances, support may access live video during a trip,” the Waymo page said.
The San Mateo Police Department’s Facebook post has garnered nearly 60 comments, with one user accusing Waymo of “snitching.”
“At least they got a designated driver?!” one user commented.
Business
Commentary: How right-wing anti-transgender attacks led to a Supreme Court ruling upholding sex discrimination
At the Supreme Court, the unfounded fear of boys masquerading as girls in youth sports rolled the clock back on gender equality.
On the surface, the Supreme Court’s June 30 opinion upholding state laws barring transgender girls from women’s and girl’s sports teams looks like a victory for women’s rights.
The 6-3 opinion by Justice Brett M. Kavanaugh certainly presents itself that way. “Females and males have inherent physical differences relevant to athletic performance,” Kavanaugh wrote. “Therefore, in contact sports, forcing female athletes to compete against males can create significant safety risks.” He also asserted that “forcing female athletes to compete against males can undermine competitive fairness.”
The ruling applied to prohibitions enacted in Idaho and West Virginia against “biological” males’ participation on women’s teams in public schools. Federal judges in both states overturned the bans. The Supreme Court majority restored them. The ruling essentially upholds similar bans enacted in 25 other states.
There was no record of any transgender person participating in school sports in the State, let alone any ‘problem’ with transgender students … creating unfair competition or unsafe conditions.
— Justice Sonia Sotomayor, demolishing the Supreme Court’s argument in favor of banning transgender girls from girl’s sports
Kavanaugh, like Donald Trump and others in the anti-transgender camp, maintained that one’s gender is an immutable fact of life, established even before birth.
Anything else, Trump stated in an executive order he issued on inauguration day 2025, could only be the product of “gender ideology extremism.” The U.S., his order stated, recognizes “two sexes, male and female. These sexes are not changeable and are grounded in fundamental and incontrovertible reality.” That’s a “biological truth,” he declared.
In his own version of this overconfident and factually insupportable conclusion, Kavanaugh wrote: “As all agree, females and males have inherent physical differences relevant to athletic performance.”
Science recognizes that some people are “born with sex traits that don’t fit into typical male or female patterns,” to cite a discussion on the Cleveland Clinic web page on the topic “intersex.” The condition “may involve chromosomes, hormones, reproductive organs or genitals.”
From a psychological standpoint, medical science recognizes “gender dysphoria” as a real condition often requiring counseling and medical intervention such as the use of puberty blockers and hormones to stave off the development of secondary sex characteristics until the condition can be resolved.
No one disputes that there are physical differences between the sexes. Few would dispute that on average or even at the median, males may be bigger and more powerful than females, or that in certain contact sports the difference may be telling and on occasion dangerous.
But that’s not the same as asserting that the physical differences between males and females invariably mean that men will invariably prevail over women in all competitions or that their participation will endanger women.
The International Olympic Committee — in a policy statement Kavanaugh cited incompletely — says that in “most running and swimming events,” males have a 10% to 12% advantage over women. That’s a range that would accommodate the full spectrum of outcomes — transgender females win, cisfemales win, they tie. (The “cis” prefix denotes those living consistent with their birth gender.)
West Virginia and Idaho addressed this ambiguity by banning transgender women from all girls’ teams. So under their rules transgender girls can’t play football or soccer with cisgirls. But what’s the argument in favor of banning them from the 100-yard dash, or cross-country track, or diving, or archery?
But something else is going on here. The Supreme Court’s ruling was almost preordained, given the years-long campaign by conservatives to demonize transgender individuals as if they’re members of an alien species.
It will be recalled that during his presidential campaign, Trump spun a despicable fantasy in which children were kidnapped in school and secretly subjected to sex-change operations.
Trump’s executive order wiped out policies aimed at protecting transgender adults from discrimination. He moved to outlaw gender-affirming medical therapies for anyone under 19 by cutting off federal funding for healthcare institutions that provide such care.
He banned transgender individuals from serving in the military and ordered federal prison officials to move transgender inmates into the general populations consistent with their birth genders, which exposes them to physical assault. (Federal Judge Royce Lamberth of Washington, D.C., has blocked the government from transferring three transgender women into the male prison population or terminating their hormone treatments.)
I wrote during Trump’s first term, when his anti-transgender policies were still gestating, that the goal was to show that “one can target any community, as long as it doesn’t have a strong political voice or political power. These are the actions of bullies and cowards, pretending to be strong.”
Last year, the Supreme Court struck its first blow against transgender rights by upholding a Tennessee law banning transgender care, including puberty blockers and hormone therapy, for minors. Similar laws have been enacted in 25 other states. The majority in that ruling by Chief Justice John G. Roberts Jr. was identical to the one in the June 30 ruling — Roberts, Kavanaugh, and Justices Clarence Thomas, Samuel A. Alito Jr., Neil M. Gorsuch and Amy Coney Barrett.
Who are the targets of this ideological campaign? They number only about 1.6 million U.S. adults, or one-half of 1% of the U.S. population. About 300,000 adolescents ages 13 to 17, or 1.4%, identify as transgender, according to a study by UCLA School of Law.
In West Virginia, as Justice Sonia Sotomayor observed in her dissenting opinion, “there was no record of any transgender person participating in school sports in the State, let along any ‘problem’ with transgender students … creating unfair competition or unsafe conditions.”
In endorsing the flat bans directed at transgender women in Idaho and West Virginia, Kavanaugh argued that any attempt to implement case-by-case judgments of students’ requests to join sports teams inconsistent with their biological gender would create “an enormous practical and administrability problem.”
Is that so? That wasn’t the case in Maine, where the annual K-12 population is more than 170,000. There, a committee was charged with determining whether a student’s participation in a sport consistent with their gender identity but inconsistent with their biological sex would “result in an unfair athletic advantage” or present a risk of injury to others. The committee held 56 hearings from 2013 through 2021, or an average of seven per year. During the entire time span, only four involved transgender girls. (The outcome of those hearings couldn’t be learned.)
It was Maine’s policy, one might recall, that provoked a confrontation between Trump and Maine Gov. Janet Mills at the White House last year, when Trump threatened to withhold federal funding from the state unless it barred transgender students from competing on women’s sports teams. “We’ll see you in court,” Mills snapped.
Whether the Idaho and West Virginia laws genuinely protect girls from unfair competition is questionable. (The Idaho law is styled the “Fairness in Women’s Sports Act.”) In practice, the laws may subject women in public schools to “invasive sex verification procedures,” as educational expert George Theoharis of Syracuse University wrote after the court ruling.
They’re also based on a retrograde view of women as fragile creatures needing men’s protection, Theoharis wrote — “the same logic that has historically been used to justify excluding women from making their own healthcare decisions and girls from rigorous math and science; that physically demanding work is simply beyond them.” (There don’t appear to be any state laws barring transgender women from competing in men’s sports.)
Becky Pepper-Jackson, the plaintiff in the West Virginia case, in which she is identified only as B.P.J., is the only transgender girl who sought to join girl’s teams — track and cross-country — in the state. That was in 2021, just after West Virginia passed its law and she was about to enter sixth grade. She didn’t appear to pose any competitive risk to others on the track and cross-country teams she applied to join — her lawyers told the Supreme Court that on those no-cut teams, she “came in near the back.”
Anyway, she had not gone through male puberty, which theoretically might have endowed her with a competitive advantage, because she had been taking puberty blockers and female hormones.
Thanks to the court’s ruling, Sotomayor observed in a dissent joined by Justices Elena Kagan and Ketanji Brown Jackson, West Virginia can deny Becky access to school sports “because it thinks they have an inherent athletic advantage, even if the facts show that they do not.”
B.P.J., Sotomayor wrote, “cannot practice on girls’ teams, even if she would not take anyone’s spot in an eventual competition, even if everyone who tries out for the team makes it, and even if having the chance to participate could aid immensely in treating B. P. J.’s gender dysphoria.”
So whose interest was really protected by the Supreme Court?
Business
Orange County real estate investor pleads not guilty in $100 million bank fraud case
An Orange County real estate investor accused of criminally defrauding an Arizona bank of nearly $100 million pleaded not guilty Monday and remains in custody.
Mahender Makhijani, 44, of Corona del Mar — who also was ordered by an arbitrator to pay $1.34 billion in a separate civil fraud case — was arraigned in Santa Ana federal court on two charges.
He is accused of bank fraud and making a false statement to a bank in a June 8 case involving a $100 million real estate loan made by Phoenix-based Western Alliance Bank. He was taken into custody on June 10.
Makhijani is accused of providing bogus collateral for the October 2024 loan now in default. In a civil lawsuit, Western Alliance said the outstanding balance as nearly $99 million.
Prosecutors say he falsified title insurance policies that showed the bank would have a first lien on the underlying collateral if the loan went bad, when in fact it did not.
A trial was set for August 11 before U.S. District Judge David O. Carter in Santa Ana.
Michael Schachter, his criminal defense attorney, did not respond to messages seeking comment.
In the civil case, an arbitrator in May ordered Makhijani to pay Laguna Beach real estate mogul Mohammad Honarkar $1.34 billion after ruling he had fraudulently induced him into a 2021 joint venture — and then wrested control and lost to creditors more than two dozen properties Honarkar had owned.
Makhijani has not been criminally charged in that case, but prosecutors alleged in an affidavit in support of the bank fraud charges that he used “force and threats” in his dealings with Honarkar and others — including taking over the landmark Hotel Laguna in 2023 that Honarkar was renovating.
Prosecutors sought to hold Makhijani without bail after his arrest.
The affidavit noted he is a legal Indian immigrant with a home and bank accounts in that country, has access to private jets and threatened to “run away” if caught in a difficult situation.
The request was denied and he was granted $500,000 bail.
However, Makhijani remains in custody after a hearing sought by prosecutors last month before Magistrate Judge Autumn Spaeth.
The judge declined to accept a $450,000 cashier’s check submitted by a Makhijani associate for the bail, finding insufficient proof the source of the funds was legitimate, according to court records.
Makhijani is not prominent outside Orange County real estate circles, but he established a thriving distressed-assets business over the last decade that attracted prominent Southern California real estate investors.
Prosecutors said it paid for a lifestyle that included two multimillion-dollar homes in Corona del Mar, a luxury apartment in Newport Beach and various luxury vehicles.
As of last month, prosecutors had not fully traced his assets, which they believe are not held in his name and some of which may be in India.
The businessman employed an array of shell companies and strawmen to sign documents on his behalf, and to stand in for him as operators of his companies, according to the affidavit.
Makhijani told an associate he took extra precautions because wanted to insulate himself from litigation and that “they were sharks in the distressed world who took advantage of people,” the affidavit stated.
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