Rep. Ro Khanna (D-CA), a self-proclaimed “progressive capitalist,” defended passing Proposition 40 to tax California billionaires, saying, “You didn’t build this money.”
Khanna defended California’s “wealth tax” on more than 200 billionaires in a podcast interview on Monday Talk to Killer Mike. The focus of doubt revolves around a referendum called “Proposition 40” that California voters are conducting during this election cycle. If passed, the proposal will impose a one-time 5% tax on billionaires. The measure would be the first tax on the assets of the ultra-rich in the United States and would reportedly be used to fund the state’s health care system.
The measure has faced fierce opposition, even from many Democrats, including California Gov. Gavin Newsom, who have warned it could backfire and drain wealth from the state. Two other referendums, Proposition 41 and Proposition 42, will also be on the ballot, and if they receive more votes, Proposition 40 will be eliminated. Proposition 41 would require audits of new tax programs, and Proposition 42 would prohibit new state personal property taxes and certain retroactive state taxes.
Podcast host and rapper Killer Mike asked Khanna, an Indian-American, how he would deal with concerns about more taxes on people who are culturally similar to him and are now among the highest earners in the United States.
“If you represent the top earners in the culture, what do you say to the people who say, ‘Well, why are we taxed now when we finally have a chance to be money-makers?’ … To the people who are aspiring billionaires, they say, ‘Why do we have a 5 percent tax under Proposition 40?’ … What are the host’s speeches?
“Well, the public isn’t scared. The billionaires are,” Khanna replied, before claiming “these billionaires don’t pay taxes.”
“If you do that, you make a lot of money, or someone makes a lot of money as a lawyer or an investment banker, and they pay taxes — they pay 40, 50, 60 percent tax. We can argue whether they pay too little or too much, and that’s the argument that Congress typically makes,” Khanna said.[But] This is a completely new form of wealth creation. These guys have companies valued at $32, $33, $40 billion, right? My district has $25 trillion in wealth, $25 trillion, one-third of the wealth in the country is in my district, within my district and within 50 miles of it. There are 989 billionaires in the United States who have created all this wealth, but they don’t pay taxes – not because they did anything illegal, [but] Because they are just sitting on these companies, these companies are growing, and their entire wealth is coming from the appreciation of the assets of these companies. “
“It’s not through a W2 form. They have no income. So, what we’re saying is, look, there’s all this new wealth being generated, but there’s no way to tax it,” he continued. “So if you put a 5% tax, we’re actually going to see more people in society benefit from this explosion of wealth because you didn’t create the money yourself. I mean, yes, you have an entrepreneurial spirit, you have some genius, you work hard, but we also have a government that basically funds the Internet. We have a government that funds AI research. We have a government that funds universities. So why not fund universities. So why not pay
Khanna added that Democrats like Newsom, who is seen as having presidential ambitions in 2028, “don’t want to offend these billionaires because they want to use their money to run for office.” He said that while many of his colleagues may secretly support taxing billionaires, they believe they need the support of extremely wealthy donors to compete with Republicans.
“So, this is really about the Democratic Party. Are we going to be the party of Bernie Sanders and the New Deal, or are we still going to be the corporate Democrats?” he said. “That’s what’s happening. That’s why this fight is so important in California.”
Khanna and Democratic Socialist Sen. Bernie Sanders (I-VT) have co-authored separate federal legislation that would tax billionaires 5% annually nationwide, called the Make Billionaires Pay Their Fair Share Act.
Katherine Hamilton is a political reporter for Breitbart News. You can follow her on X @thekat_hamilton.