A proposed California wealth tax could force Larry Page and Sergey Brin to forfeit half their Google shares—revealing what could be a fatal flaw in how the legislation treats dual-class stock structures.
Y Combinator CEO Garry Tan has sounded the alarm on California’s proposed billionaire tax, arguing that the legislation contains a structural flaw so severe it could force Google’s founders to leave the state—or lose half their stake in the company they built.
In a detailed post breaking down the mechanics of the proposed 2026 Billionaire Tax Act, Tan explains how the legislation’s treatment of dual-class voting shares creates what he calls a confiscatory tax that would “wipe out” 50% of Larry Page and Sergey Brin’s Alphabet holdings despite being labeled as just a “5%” wealth tax.
The Math That Doesn’t Add Up
The issue centers on how the SEIU-UHW-backed California billionaire tax proposal calculates ownership for tax purposes. Each Google founder owns approximately 3% of Alphabet’s outstanding stock—worth roughly $120 billion at the company’s current $4 trillion market cap. But those shares carry 10x voting power compared to standard shares, giving each founder about 30% of voting control.
According to Section 50303(c)(3)(C) of the proposed legislation, “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.”
In practice, this means the state would assess the founders’ wealth based on their 30% voting control, not their 3% economic interest. Under a 5% annual wealth tax applied to that inflated valuation, each founder would face a $60 billion tax bill—equivalent to 50% of their actual Alphabet holdings.
“That’s 50% of their actual Alphabet holdings—wiped out by a ‘5%’ tax,” Tan wrote.
A Structural Conflict With Silicon Valley
The proposed tax’s treatment of dual-class shares puts it on a collision course with one of Silicon Valley’s most common corporate structures. Companies from Meta to Snap to countless startups use supervoting shares to allow founders to maintain control while raising capital from public markets or venture investors.
The structure has been defended by tech leaders as essential for long-term innovation, allowing founders to resist short-term shareholder pressure in favor of multi-year bets on emerging technologies—from Google’s early investments in Android and YouTube to its current AI initiatives.
Tan’s analysis suggests the wealth tax, as currently written, would effectively penalize this governance structure, forcing founders to choose between maintaining control of their companies or remaining California residents.
“The wealth tax is poorly defined and designed to drive tech innovation out of California,” Tan concluded.
Implications for AI and Tech Leadership
The timing is particularly significant as California seeks to maintain its position as the global center of artificial intelligence development. Alphabet, through Google DeepMind and its various AI initiatives, represents one of the state’s largest concentrations of AI talent and research investment.
While Page and Brin have have already begun relocating to other states, the proposed legislation could accelerate an exodus of tech wealth and the philanthropic, investment, and innovation ecosystems that accompany it.
The Billionaire Tax Act is currently being advanced for the 2026 ballot. If passed, it would impose a 5% annual tax on California residents with wealth exceeding $1 billion, with the stated goal of funding healthcare and education programs.
Critics like Tan argue the legislation’s flaws extend beyond dual-class shares, pointing to broader questions about wealth valuation, illiquid assets, and the economic consequences of high-net-worth individuals restructuring their lives around tax avoidance.
For now, the debate over California’s wealth tax has crystallized a key question for the state’s political and business leaders: whether aggressive taxation of billionaire wealth is worth the risk of losing the founders, companies, and innovation engines that created that wealth in the first place.