Mark Cuban and Ro Khanna spar over wealth-tax loans

Representative Ro Khanna, the Silicon Valley Democrat behind a one-time 5% wealth tax on California billionaires, has a companion idea for founders whose fortunes sit in illiquid shares: lend them the money to pay the levy. Mark Cuban spent the weekend on X calling that notion insane. The exchange, reported by Financial Planning, lands as the tax heads to a November ballot.

A wealth tax has to be paid in cash. Khanna's loan plan is for founders who do not have it. A founder pledges shares, the government supplies the cash, and the loan runs about ten years. Khanna describes it as non-recourse: repay, or the government takes the shares. The tax itself has rattled the state's ultra-wealthy, split California politics, and pushed some billionaires out of the state, according to the report. Whether some founders would have to sell stakes just to pay the levy is an open question.

Cuban, who backs Democratic candidates and is worth $10.6 billion, rejects the arithmetic. By Cuban's math, the government lends the money, gets it back as tax, and has no extra receipts to show for it. He called the plan an insult to entrepreneurs and predicted startup founders would leave California rather than file under a wealth tax. Anduril co-founder Palmer Luckey and investor Bill Ackman also pushed back. Khanna countered that most of the state's 250 billionaires face no liquidity problem; he named Nvidia's Jensen Huang, AMD's Lisa Su, and Alphabet's Sundar Pichai as leaders he expects to stay. The fight has put Khanna at odds with some of his former wealthy backers.

For advisors with founder clients who are wealthy on paper, the fight is a useful opening. A wealth tax is a bill that arrives without a sale. The practical questions are plain: Can the shares carry borrowing, at what valuation, and would the client rather borrow, sell a stake, or change domicile before the vote? The loan plan may never become law, but the scenario — a large tax liability against an illiquid balance sheet — is worth thinking through no matter what voters do.