California’s latest fight over how to tax extreme wealth has taken an unexpected turn, with the top elected leader of Silicon Valley’s biggest city breaking ranks with his own party. The Democratic mayor of San Jose, Matt Mahan, is opposing a proposed billionaire tax that supporters say would shore up health care and social services, putting him at odds with progressive activists and some of the state’s most prominent Democrats. His stance crystallizes a deeper rift inside the California left over whether to lean harder on the ultra-rich or protect the state’s fragile innovation ecosystem.
At the center of the clash is a ballot initiative known as the 2026 Billionaire Tax Act, which would target a small number of extremely wealthy residents but could reshape the relationship between California and the tech fortunes that helped define it. As tech moguls threaten to leave, unions rally behind the measure, and federal health care cuts loom, Mahan’s opposition is less a local skirmish than a test of how far a blue state can go in taxing billionaires without triggering an economic backlash.
Why a Democratic Silicon Valley mayor is breaking with the left
Matt Mahan is not the kind of politician who typically fronts a revolt against higher taxes on the rich. He is a Democratic mayor, leading San Jose, California’s largest city and the urban anchor of Silicon Valley, and he owes his office in part to voters who are comfortable with activist government. Yet he has come out against the proposed billionaire levy, warning that it could undermine the region’s innovation economy and accelerate an exodus of capital and talent. In a public statement, he framed his opposition as a defense of the “innovation economy,” arguing that the measure risks signaling to founders and investors that California views them primarily as a revenue source rather than partners in growth, a concern he attached directly to the billionaire tax proposal.
I read Mahan’s move as a calculated bet that Silicon Valley’s long-term prosperity is more fragile than it looks. He is effectively arguing that the region’s competitive edge rests not just on its universities and climate but on a perception that California, for all its regulations, still welcomes risk-taking and outsized success. By opposing the Billionaire Tax Act, he is siding with investors who warn that the measure could push high net worth residents to relocate, taking future startups, IPOs, and philanthropic dollars with them. That puts him in the unusual position of a Democratic city leader echoing concerns more commonly voiced by venture capitalists and founders, even as many in his party see the tax as a necessary correction to decades of wealth concentration.
Inside the 2026 Billionaire Tax Act and the health care squeeze
The stakes of this fight are not abstract. The 2026 Billionaire Tax Act is designed to raise money from a narrow slice of ultra-wealthy Californians and channel it into health care and related services. The measure’s own language says “The purpose of the 2026 Billionaire Tax Act … is to protect access to high-quality, equitable health care, and to support the state’s health system by taxing extreme concentrations of wealth,” a mission that supporters tie directly to the state’s looming budget pressures and that is spelled out in the ballot initiative language. Backers argue that a state with so many billionaires can no longer justify cutting hospital services while fortunes soar…