California is witnessing an exodus of high-net-worth individuals following the introduction of the new Wealth Tax. Last month, Google co-founders Sergey Brin and Larry Page officially shifted their base out of California just ahead of the January 1 deadline, and now another tech leader has announced that he is leaving the US state. Andy Fang, the billionaire co-founder of DoorDash, has become the latest high-profile tech leader to announce plans to leave California. In a post on X (formerly Twitter), Fang cited the state’s controversial 2026 Billionaire Tax Act as the primary driver, and specifically targeted a provision that penalises founders who maintain voting control over their companies.“I love California. Born and raised there. But stupid wealth tax proposals like this make it irresponsible for me not to plan leaving the state. This Class B thing itself could wipe me out,” he said in the post.“Being founder-led is a big part of what makes DoorDash special. I will fight to keep it that way,” he added.
What is the ‘Class B’ conflict in California ‘Wealth Tax’ Act
Fang post came in response to a particular post by Y Combinator CEO Garry Tan who highlighted concerns over the “dual-class” share structure which is common in Silicon Valley. Like the founders of Google and Meta, Fang holds Class B shares, which grant him more voting power than standard Class A shares – allowing founders to maintain control over their company’s direction. Tan explained this in his post:Section 50303(c)(3)(C) of the 2026 Billionaire Tax Act states: “For any interests that confer voting or other direct control rights, the percentage of the business entity owned by the taxpayer shall be presumed to be not less than the taxpayer’s percentage of the overall voting or other direct control rights.”This means if a founder holds shares representing only 3% of economic interest but 30% of voting control (through Class B supervoting shares), the tax would presume their ownership stake is at least 30% for valuation purposes, not 3%.The wealth tax is poorly defined and designed to drive tech innovation out of California.The law is so poorly written. While the lawyers who drafted it claim it doesn’t apply to publicly traded shares, they designed a legal trap where Class B voting shares would count as private shares and therefore considered ownership.It’s so dishonest.Tan calculated that this provision could effectively “confiscate” 50% of a founder’s wealth in a single year. Tan and Fang both criticised the language of the Act, with Tan even going forward to say, “The law is so poorly written”, calling it a “legal trap” designed to treat public voting shares as private ownership.
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