California is experiencing an exodus of wealthy individuals following the introduction of the new wealth tax. Last month, Google co-founders Sergey Brin and Larry Page officially relocated from California just before the January 1 deadline, and now another tech leader has announced he is leaving the US state. Andy Fang, the billionaire co-founder of DoorDash, is the latest high-profile tech leader to announce plans to leave California. In a post on“I love California. I was born and raised there. But stupid property tax proposals like this make it irresponsible for me not to leave the state.” This Class B thing itself could wipe me out,” he said in the post.“Founder leadership 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 the California “Wealth Tax” Act?
The Fang post came in response to a particular post from Y Combinator CEO Garry Tan, who expressed concerns about Silicon Valley’s common “dual-class” stock structure. Like the founders of Google and Meta, Fang owns Class B shares, which give him more voting rights than standard Class A shares – allowing founders to maintain control over the direction of their company. Tan explained this in his post:Section 50303(c)(3)(C) of the Billionaire Tax Act of 2026 states: “For any shares conferring voting or other direct control rights, the percentage of the business entity owned by the taxpayer shall be deemed to be not less than the taxpayer’s percentage of the total voting or other direct control rights.”That is, if a founder holds shares representing only 3% of beneficial interest but 30% of voting control (via Class B voting shares), the tax would assume for valuation purposes that his or her ownership interest is at least 30%, not 3%.The property tax is ill-defined and designed to drive technological innovation out of California.The law is so poorly written. While the lawyers who wrote it claim it doesn’t apply to publicly traded stocks, they have laid out a legal trap where Class B voting shares would be considered private stock and therefore considered property.It’s so dishonest.Tan calculated that this provision could effectively “seize” 50% of a founder’s assets in a single year. Tan and Fang both criticized the wording of the law, with Tan even saying, “The law is so poorly written” and calling it a “legal trap” designed to treat public voting shares as private property.
