A California-Style Wealth Tax Would Slash Mass’s Startup Economy
The list of problems surrounding California’s proposed wealth tax keeps growing, with more voices across the political spectrum coming out against the state’s proposal to tax individuals with $1 billion+ net worth. Billionaire entrepreneur and prolific investor Mark Cuban is pointing out new concerns over impacts on the Golden State’s startup economy. That should catch the attention of Massachusetts, since some union leaders say they want to adopt a similar tax here.
Data shows Massachusetts is one of the top destinations in the country for startups, and the state has invested significantly in making the Commonwealth a leader in innovation. Cuban’s concerns should be a red flag for Massachusetts.
Problem #1 – A Billion-Dollar Company Doesn’t Mean a Founder Has A Billion Dollars
Cuban explains a wealth tax would specifically hurt startup founders whose companies may boost their net worth on paper but don’t have millions of dollars sitting in the bank. For example, shares of a company whose valuation has soared after raising money from investors would count towards a person’s personal wealth.
A founder who owns just 10 percent of a company valued at $10 billion could therefore be considered a billionaire by the state, even if only on paper.
That could leave founders facing a hefty tax bill without the cash on hand to pay for it. The founder would either have to sell shares of their own company or take out a loan to pay the tax.
Problem #2 – Pushing Founders to Leave
For Cuban, the concern goes beyond how founders would raise the cash to pay the tax. He warned that if the proposal passes, he would ask any startup he was considering investing in to leave California first.
Interviews with several California billionaires suggest some of the state’s wealthiest residents and business owners are already making plans to move operations elsewhere, places like lower-tax Texas and Florida.
That could turn a tax aimed at California’s wealthiest residents into a much broader problem. When founders and investors leave, they can take their businesses, investment dollars, and future job growth with them.
A Warning For Massachusetts
The fallout from California’s proposed wealth tax carries particular significance for Massachusetts. The state punches well above its weight when it comes to producing billion-dollar startups. Similar proposals exported to the Commonwealth could hurt the state’s historical status as home to a robust innovation economy.
In a recent survey of people who moved out of Massachusetts, the state’s high tax burden was the top reason pushing them to leave, offering another warning about the risks of giving high earners greater incentives to relocate.
Read our full analysis here.
Retailers Association of Massachusetts President Jon Hurst Tells Boston Globe: Tax Reform Needed Amid Rising Revenue Collections
Massachusetts retail sales soared in June, with new figures from the Department of Revenue showing that sales tax collections rose nearly 15 percent that month from June 2025. You might think Jon Hurst, president of the Retailers Association of Massachusetts, would celebrate.
Nope. He looks back on other months in the fiscal year that ended on June 30, and sees the low single digit growth year-over-year, or even declines. To keep the good times going, Hurst is again championing a reduction in the state’s sales tax from its current level of 6.25 percent. (Maybe, he says, it could be paired with another estate tax reform.)
Hurst knows the state faces budget challenges. But he says focusing on the sales tax would be a great place to start in the next two-year legislative session, or these good times might not last for much longer.
Read the full story here, and Hurst’s response calling Massachusetts’ sales tax the “most regressive tax on the books” here.
What We’re Reading
Almost 130,000 people work at Mass. universities. Many are now on the ‘chopping blocks.’, Boston Globe
McCaughey: ‘Tax the rich’ great way to hurt economy, Boston Herald
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