The Emigrants

It seems the billionaires are moving (again). This time in response to a law that doesn't even exist yet. It seems that if the rich don't like even the suggestion of an idea they'll take their ball and leave the field. Take about priveledge.

This all has to do (this time) about a proposal by service employees and healthcare workers to create a one-time 5% tax in California on those folk that profited from building their companies in the state. Said proposal is to put a referendum on the next California ballot. So, first the proposal still needs 875,000 signatures before June, and then if it gets those, the referendum would need to get more than 50% of the citizens' votes.

So what we have is a bunch of spoiled boys pre-maturely ejaculating themselves from the state. The rhetoric from the rich really rankles. "It's an asset seizure" said one venture capitalist who seems to confuse a tax with an actual confiscation. You'd think a venture capitalist would know how money works.

Note that more than 30 billionaires left California after the state put a 1% surcharge on earnings over US$1 million early this century. Of course, most of them left their companies in place to still take advantage of California's tech-savvy employee base, infrastructure, and more.

Forbes quoted one as saying "why would you ever start a business in a state like California?" Well, you might not. Of the ten largest US companies, only two are headquartered in California (plus one has a significant tech presence). And they're in the state for the same reason as I: access to venture capital, resources, cutting edge research at Stanford and Cal Berkeley, technical logistics support, and, of course, some of the very best tech thinkers/creators/designers in the world and all the support staff (lawyers, accountants, etc.) that are required. All of whom benefit from state-provided and managed resources.

Most of my rich friends basically want to share absolutely zero dollars of their Silicon Valley-derived wealth because, well, that would be stealing from them. In the case of Larry Page, one of Google's co-founders, and who made the move to Miami just prior to the possible backdate of any new tax, he seems to think stealing data from users is a fine way to make billions, but has no interest in giving anything back to make it possible for the next Stanford graduate to do the same.

I have to at this point give a shout out to Nvidia's CEO, Jensen Huang, who said on Bloomberg TV "I'm perfectly fine with it." It seems the immigrants have a better idea of what it takes to build the best place to create a tech business than do the billionaire emigrants.

Note further that there are currently 246 billionaires in California, so what's really driving the 30 or so that have left? Greed, I'd say. Silicon Valley is still the best place to start something in tech that will make you a billionaire, after all. Of course, once you win the lottery, you're stuck with the consequences unless you use the escape hatch.

As much as I hate the California Franchise Tax Board (CFTB), one of the most onerous and aggressive tax collectors in the world, and one that would give the Mafia a run on being most efficient revenue collector, I'm on their side this time should the proposed law ever come into being. Page wants to visit his company's headquarters in the future? Tax his income while doing so, and in Google "we're not evil" style, don't give him the ability to opt out.

Just counting ten top billionaires in California, I came up with US$938 billion in wealth that was pretty much built from nothing, and seven of those could really only have done that in California.

Yes, California is expensive. If it were a country, it would also have the fourth or fifth largest economy in the world. It's partly expensive because of the way it incubates businesses and builds infrastructure those businesses rely upon.

I apologize if I haven't been satirical enough in this post. Sometimes the serious stuff is just as important.