"Hey, what's the big deal? We used to append 'P.S. I love you. Get your free email at Hotmail' to every outgoing email way back in the day, and no one ever had a problem with that..."

Or 300M plus interest per year over 5 years.

Not including Federal capital gains taxes on sale of any company shares that he liquidates, or California income taxes, likely at the 14.4% tax bracket.

Or he could try and find a bank to lend him 300M in cash every year, secured against his equity stake. Anyone?

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So wait... if I migrate my stuff to the ME datacenters, I won't have to pay? I'm aware that service may not be available or intermittent, and that resources may be lost permanently without warning... but if I'm designing for fault tolerant operations, this seems like a perfect proving ground, and not having to pay during the reconstruction period seems like a bonus...

If you made the mistake of buying into the platform you're faced with a decision:

1. Rationalize your continuing with the platform
2. Tossing the platform and choosing a different platform
3. Giving up on the various platforms as all suspect and doing something else with your life

Substitute platform for anything that you have to invest a non-trivial amount of cognitive focus, time, money, etc. It's not like your abuser is going to show their stripes from the get go - if they did, you would have already moved on.

See Cory Doctorow's thesis on enshittification:

https://en.wikipedia.org/wiki/...

"Doctorow argues that new platforms offer useful products and services at a loss, as a way to gain new users. Once users are locked in, the platform then offers access to the userbase to suppliers at a loss; once suppliers are locked in, the platform shifts surpluses to shareholders.[9] Once the platform is fundamentally focused on the shareholders, and the users and vendors are locked in, the platform no longer has any incentive to maintain quality. Enshittified platforms that act as intermediaries can act as both a monopoly on services and a monopsony on customers, as high switching costs prevent either from leaving even when alternatives technically exist.[7] Doctorow has described the process of enshittification as happening through "twiddling": the continual adjustment of the parameters of the system in search of marginal improvements of profits, without regard to any other goal.[10] Enshittification can be seen as a form of rent-seeking.[7]"

Not everybody on the internet today was around when the Sony rootkit incident happened (over 20 years ago).

For reference for those who want to find out about said rootkit incident:

https://en.wikipedia.org/wiki/...

"n 2005, it was revealed that the implementation of copy protection measures on about 22 million CDs distributed by Sony BMG installed one of two pieces of software that provided a form of digital rights management (DRM) by modifying the operating system to interfere with CD copying. Neither program could easily be uninstalled, and they created vulnerabilities that were exploited by unrelated malware. One of the programs would install and "phone home" with reports on the user's private listening habits, even if the user refused its end-user license agreement (EULA), while the other was not mentioned in the EULA at all. Both programs contained code from several pieces of copylefted free software in an apparent infringement of copyright, and configured the operating system to hide the software's existence, leading to both programs being classified as rootkits. "

This is an interesting question, which probably can only be answered by triggering a natural experiment and having the ultrawealthy (as opposed to the merely well-to-do) [maybe] leave the state.

In the best interests of the side advocating for and against wealth taxes, if California wants to put itself out there for the sake of the answering the question, the rest of the nation should be happy that they're willing to be the guinea pig.

The only caveat is that you need to wait to actually see what the results are in California before attempting to pass/block similar legislation in the rest of the US. Which, in this case, would be about 5 years - the period of time in which the wealth taxes would be collected in California under this proposal.

Man, someone had the knives out for Peter Thiel when they wrote this clause in:

"(7) The following categories of assets shall be exempt from all taxation under this part and also from the reporting requirements of this Section:

(A) Except as described in subparagraph (B), qualified pensions and individual retirement arrangements, including those described by Section 219(g)(5) of the Internal Revenue Code, or foreign pension arrangements similar in nature to those described in that Section and exempted from U.S. taxation by a treaty obligation of the United States;

(B) Amounts held in Roth IRA or other Roth-type retirement arrangements or any substantially similar accounts, except to the extent that the aggregate value in all such accounts in which the taxpayer holds a beneficial interest, either directly or indirectly, exceeds $10 million ($10,000,000) in present value;"

So yeah, tax advantaged accounts are not considered part of your wealth... unless you have more than 10M in your roth account. In which case, they'll gladly consider it as part of the total wealth to evaluate when considering #1 - whether you owe tax, and #2 - how much tax you owe.

If you happen to have more than 1B in assets, and were trying to move money into your Roth (which is a taxable event, btw) to reduce your required minimum distributions, AND it caused your roth to tip over the 10M mark, guess what, it just backfired.

Peter Thiel, in the meantime, already decamped for Florida. For those who don't know why this clause was written, see the ProPublica article, which used stolen IRS data to hang him in effigy:

https://www.propublica.org/art...

https://www.wsj.com/opinion/pe...

This is starting to feel like AB5 when they tried to skewer Uber and Lyft and fucked over freelancers:

https://pacificlegal.org/calif...

And then Uber and Lyft just opened up their wallets and got themselves an exemption.

https://fedsoc.org/scdw/califo...

The prime mover behind that law:

https://thecoastnews.com/comme...

"Exemplifying Sacramentoâ(TM)s incestuous relationship with Big Labor, Gonzalez has since left her District 80 Assembly seat last year to become head of the California Labor Federation.

According to the court, the exemptions, which pick winners and losers, explicitly exclude Uber et al. even though similarly situated app platforms like Wag! and TaskRabbit received exemptions for such workers as dog walkers and yard cleaners.

In trying to defend Gonzalezâ(TM)s poorly drafted law during oral arguments on July 13, 2022, the stateâ(TM)s deputy attorney general withered under questioning from the three-judge panel. It was notable, the court wrote, that counsel for the state was âoeunable to articulate a conceivable rationale for AB 5 that explains the exemptions made by AB 5, as amended.â"

My theory about the cost of housing in California is that a lot of it has to do with pre-loading the cost of the home upfront, in exchange for a guarantee on future property tax increases.

Also, up until the recent prop 19 reversed the previous prop 58/193 laws on passing property tax assessment through inheritance, you were paying up front to guarantee that tax rate and rate of increase to your heirs.

If you think about prop 13 as rent control, it makes sense that the longer you've been in your unit, the more valuable it is... and conversely, if you intend to stay in California a long time, you can amortize the up front cost over a longer period, and reap benefits, especially during high inflation periods.

I haven't actually done the math to see when total cost of ownership breaks even when compared to a cheaper house in a state without a limit on property tax increases. But I suspect that houses being cheap in other states may not only be a function of them being in areas that are undesirable to live in from a lifestyle perspective.

You could easily address this specific case by raising capital requirements for banks that take stock as collateral. At a certain point, the cost of fronting the money becomes extremely expensive.

With that said, it's not like they're not paying taxes - it's just being paid indirectly by the bank, when they realize the capitalized interest (I'm assuming it is capitalized interest, since your example seems to assume no money is ever directly paid to the banks for lending out cash when using stocks as collateral.)

From that perspective it is brilliant - if they actually sold their stock, voting issues aside (let's assume they have founders shares that give them voting control, in addition to common shares which they can sell), they'd tank the stock price and probably get a bunch of nuisance lawsuits. By taking it to a pawn shop (the bank) and getting a loan against it, they get to prop up the stock price while getting cashflow from what would be an illiquid asset.

Speaking of which... for the truly wealthy in California, guess what they'll do in order to cough up the money to pay taxes? You got it - lend out their stock to banks, get cash, and then use that cash to pay their tax bill. The risk is then transferred to the banks... and if the banks go under in a sudden financial crisis, guess who bails them out? Not them...

I want to point out that deferring taxation on unrealized gains is supposed to be a feature, not a bug. If I had to sell part of my retirement portfolio every year to pay taxes on the gains from my mutual funds buying and selling over the course of a year, there would be a lot less capital available for investment, simply because you'd either need to reserve a portion of it up front for future taxes, or sell part of your ownership stake to pay taxes later. This is particularly problematic for investments that are not easily valued, or are illiquid. Both of which are issues that have occured during recent financial crises.

Or to put it another way... this is how ranches end up as subdivisions. Doesn't matter if business is up or down, you owe property taxes on the assessed value of the land. Pay up or have it forcibly confiscated and sent to tax auction. From that perspective, assets become less something you own, and more something that you rent from the government. From that perspective, things like California's prop 13 would be a form of rent control on property taxes.

I'm loathe to buy into their marketing and call it a wealth tax, when it's actually an asset tax.

To me, wealth implies surplus. If you have surplus, you can give some of it up and not be immediately hurt (leaving aside losing money set aside for a future rainy day.) But while that's how the proposed propsition is being sold, that's not how it works.

To give an example, let's say I own 50% + 1 of a company I found, which is worth 2B.

Under the text of the proposed law:

"(a) An excise tax is imposed for tax year 2026 on the activity of sustaining excessive accumulations of wealth by applicable individuals with net worth of $1 billion dollars ($1,000,000,000) or more, and on applicable trusts. For purposes of this Part, whether an individual or trust is an applicable individual or applicable trust is determined as of the tax obligation date, and the amount of net worth subject to tax is measured as of the valuation date. For purposes of this Section and for subdivision ( c) of Section 50301 respecting the filing of returns, a married couple shall be considered as one individual.

(b) For individuals and trusts on whom tax is imposed under subdivision (a), the tax imposed is 5 percent of the net worth of such individual or trust. In the case of an individual ( other than a trust) having net worth less than $1.1 billion ($1,100,000,000), the tax imposed by this Section shall be reduced by 0.1 percentage point (but not below zero) for each $2 million ($2,000,000) by which such person's net worth falls below $1.1 billion ($1,100,000,000). In the case of an individual ( other than a trust), who opts to initiate an Optional Deferral Account ("ODA") (pursuant to Section 50304), assets attached to the ODA are not subject to tax under this Section until specified by Section 50304.

(c) Except as provided in subdivision (b), any additional tax payable as a result of this Section or Section 50304 for any tax year shall be reported with, and is due at the same time as, the annual income taxes of a taxpayer under Part 10 ( commencing with Section 17001 ). A taxpayer owing any additional tax imposed under this Section shall have the option either to (1) pay any tax due under this Part along with any income tax owed for the 2026 tax year; or (2)
pay annually in five equal installments commencing in the year the tax is due, with each subsequent annual installment payment also being subject to an annual nondeductible deferral charge of 7.5 percent of the remaining unpaid balance."

So let's assume that my net worth is exactly 1B in USD. If I'm doing my math correctly, I don't think I'm actually subject to the tax, since I'm 100 million below the 1.1B mark, and every 2M gives me a 0.1% point reduction in the 5% tax. 100 / 2 = 50. 50* 0.1 = 5. 5% exclusion effectively nullifies the 5%. So I can be a billionare and not be subject to this tax...

Now, unlike how income tax bands work, I don't get an exclusion of the income below 1B if my total worth is above 1.1B. So at 1.1B, I get socked with 5% on everything (like how the City of Los Angeles takes a 4-5% transfer fee on the entire value of a real estate transaction, regardless of whether you're selling at a loss or profit).

Let's assume that instead of being worth 1B, thanks to being granted some extra stock options for good peformance, I'm actually worth 100M extra as of Jan 1st, 2026. To make things easy, I'm only going to say that the 100M extra is due to options that actually vested - any options that aren't yet vested have zero value.

The raw number is 1,100,000,000.00, and the 5% tax on that is worth 55,000,000.00, 55M, or just over half of my stock options bonus. Remember, as per section (c) above, the asset tax is independent of income taxes. So if I sell my stock options (for the sake of argument, let's assume I can find a secondary market that will value them at the value they were realized at) I owe taxes on them.

California doesn't give a fuck about long term vs. short term capital gains - it's all considered income. So that part of the accounting is easy. And if I already paid taxes on option vesting, I don't need to pay any additional income taxes.

In this scenario, having 100M in stock options vest, because I was at the 1B mark, causes me to effectively get a 55% increase in the income taxes I was already paying on having those stock options, which in California would be something like 14.4% (I'm ignoring Federal taxes here), or 14,400,000.00 (14.4M). Before the asset tax, I'd pay 14.4M on realized options taxes in California, after the asset tax, I'd pay 69.4M.

So that was the "happy example" where the 100M happened to be "extra" money that I would have paid taxes on anyways. I just now have to pay way more (480% more). That's fine, I'll get to write it off on my Federal taxes... oh whoops no, there's a SALT cap. Oh well.

Here's an unhappy example. I have $100k in stock options that vest before the latest funding round. I opt to pay taxes on that (there are some situations where I can defer recognition of income on vested options, but I choose to recognize the income immediately). Let's assume that's my entire income for the year. I pay $5736 in the year 2025, making that an effective 5.736% California tax rate. We work our tails off and succesfully make our funding round on Dec 31, 2025. My 100k in stock options that I already paid taxes on is now worth 100M. My company, which was worth considerably less than 2B, is now worth 2B, and I own 50% plus one share of stock.

Under the old rules, I wouldn't have to pay taxes on the market value of those options until later, but because I've now triggered the 1.1M limit, I'm subject to a full 5% tax on all my assets, regardless of whether they are gains or losses from basis. To pay the $55M I owe, I have to sell my stock options on the secondary market, and I have to sell an additional amount to settle the 14.4% I owe in income taxes on the $55M I just sold, or $7.92M, for a grand total of 62,920,000.00, or $62.92M. that's 10969x increase in taxes, or 1.09M% increase.

You're like, ok fine, boo hoo. Let me hit you with the really fucked up example.

Between when my vested options suddenly pushed me over in the last example (Jan 1, 2026 is the valuation date for purposes of calulating taxes owed), and when my taxes are actually due (let's assume in 2027) while attempting to sell my options on the secondary market, we have a huge down round. My company is no longer worth 2B - in fact, thanks to the fickle whims of fate, we're taking a huge hit (assume I founded an EV startup). Although on paper I was worth 1.1M on Jan 1st, 2026, I'm closer to being worth 100M now, my company value plummeting from 2B to just 200M.

But guess what? I still owe 55M, plus taxes on selling my equity in the company, to the total tune of $62.92M, since that number is based on the valuation post big funding round on January 1st, 2026.

And while yes, I theoretically can defer part of that for up to 5 years, I'm paying the state 7.5% on the remaining balance yearly for the privilege:

"A taxpayer owing any additional tax imposed under this Section shall have the option either to (1) pay any tax due under this Part along with any income tax owed for the 2026 tax year; or (2) pay annually in five equal installments commencing in the year the tax is due, with each subsequent annual installment payment also being subject to an annual nondeductible deferral charge of 7.5 percent of the remaining unpaid balance."

Even so, that's not the worst case scenario. I can sell off the majority of my ownership my company ("Hey Larry Ellison, you interested in buying an EV startup? Please?) to pay off my tax burden, but at least at the end of the day, it is paid, and I still own something in my company.

Here's the worst case scenario.

In our downround, we get shafted, and next thing you know, the company goes under. My options, my shares, they're worth nothing, and I go on unemployment. EXCEPT... it all goes to pay my 55M tax debt on a company that is now valueless. Infinity increase in taxes... California don't care that I'm penniless now... by the letter of the law, I owe "wealth tax" on what I was worth on January 1, 2026, regardless of how much money I have now.

I guess I should have liquidated that $62.92M in options on January 1, 2026, huh?

So, this article from the Mercury News in 2023 states that a then recent study from UC San Francisico had 9/10 homeless having formerly been residents in California:

https://www.mercurynews.com/20...

"According to the study, which surveyed nearly 3,200 homeless people statewide, nine in 10 respondents lost their housing in California. Three-quarters still lived in the same county as their last home.

And while the majority reported having used illicit drugs or experiencing serious mental health issues, the study found homelessness was inextricably linked to the challenge many residents face in finding and affording stable housing."

Link to the study:

https://homelessness.ucsf.edu/...

"Designed to be representative of all adults 18 years and older experiencing homelessness in California, CASPEH includes nearly 3,200 administered questionnaires and 365 in-depth interviews with adults experiencing homelessness in eight regions of the state, representing urban, rural, and suburban areas. Interviews were conducted in English and Spanish, with interpreters for other languages. In partnership with a wide array of community stakeholders, the UCSF BHHI team collected data between October 2021 and November 2022. CASPEH was funded by UCSF BHHI, the California Health Care Foundation, and Blue Shield of California Foundation. "

From the text of the study:

"Birthplace and Where Participants Lived
Prior to Homelessness
Despite conjecture that people move to California
once homeless, our data did not support this. In fact,
most participants did not move far from where they
last were housed. Ninety percent of participants
became homeless in California, having been last
housed in the state. People who experience homeless-
ness in California are Californians. Three-quarters
(75%) of participants lived in the same county where
they were last housed; 3% were homeless in a nearby
county within the same census region. Eleven percent
stayed within California, but lived in a different
census region from where they lost their housing.
Most participants (87%) were born in the United
States. One-quarter (28%) of Latino/x, 60% of AAPI,
and 52% of âoeotherâ respondents were born outside
of the United States. Two-thirds (66%) were born
in California."

Now, the numbers may have changed since then, or the numbers might have been higher for out of state originated homeless prior to the pandemic, or the sample size was insufficient, or poorly distributed. If you have other sources, please share.

I find your statement about the electoral college weird because... according to the census, homeless people are counted as residents. Which technically means that for non-native homeless, their home states ceded part of their electoral college impact by having their residents migrate to California. Shouldn't that mean then that California benefits from population flight from other states in terms of its outsize impact in choosing the presidents and representation in the House? Keep in mind that persons includes those who are not able to vote - which includes children.

https://countallkids.org/child...

"The number of young children that are not represented in the Decennial Census has been increasing steadily for 40 years, even as the number of adults counted has become more accurate. The problem is worse in larger counties and for children of color.

Some young children are not counted because they live in households that do not submit a census form. Many young children are not counted because their families respond to the census form but do not include the child. Some adults may not realize that babies, toddlers and young children should be included on the census form.

When we surveyed families with young children in 2019, one in ten â"10%â" said they would not include their young child on the census form and another 8% said they were uncertain if they would include their young child on the census form. "

I'll point to this article:

https://fortune.com/2026/03/17...

"Six of Californiaâ(TM)s 214 billionaires have been widely reported to have left the state in time to avoid a proposed 5% wealth taxâ"but that small cohort would have collectively generated $27 billion in tax revenue, roughly a fourth of the initiativeâ(TM)s projected $100 billion haul."

I'm assuming the parent poster, when citing half the 100 billion has walked, is referring to the likelyhood that billionaires who moved after the Jan 1 deadline are betting that retroactive taxation will be ruled unconstitutional, given that the backers have explicitly stated that the retroactive deadline was to prevent billionares moving to avoid being taxed by the law.

"The tally of departed billionaires likely understates the extent of the flight. Meta CEO Mark Zuckerberg has also reportedly left the state, but not before the Jan. 1 deadline. Venture capitalist David Sacks, whose net worth has been reported to range from $250 million to $2 billion, also left the state as his company Craft Ventures moved to Austin. Zuckerberg would take another roughly $10 billion of tax revenue with him. "

https://www.cnbc.com/2026/01/0...

"Attorneys also say that the retroactive provision makes it a certain target for lawsuits. In addition to broader lawsuits claiming the tax is unconstitutional, taxpayers who leave before November could claim the retroactive date violates due process, according to attorneys. While the Supreme Court has allowed some retroactive taxes when there is a "rational legislative purpose," they are less likely to allow it with "the creation of a wholly new tax," attorneys say.

"I think the strongest legal challenges will be from people who leave before it's passed," said Jon Feldhammer a tax partner at Baker Botts.

Because of the strength of the legal argument, Feldhammer said some wealthy Californians are planning to leave this year, after the Jan. 1 effective date but before the tax goes to voters in November."

There are serious consequences to founders who stay in state, as voting control is equated with asset ownership under the law.

https://taxfoundation.org/rese...

"The proposed wealth tax
has distinct valuation methods for different asset classes and ownership structures. Publicly traded assets are valued based on the assetsâ(TM) market trading value, but there are different rules for assets that are not publicly traded.

Under the initiative, âoeFor any interests that confer voting or other direct control rights, the percentage of the business entity owned by the taxpayer shall be presumed to be not less than the taxpayerâ(TM)s percentage of the overall voting or other direct control rights.â[2]

Founders often hold private Class B or other super-voting shares with transfer restrictions preventing them from being sold to the public, but which confer voting control over a publicly traded company. Together, for instance, Larry Page and Sergey Brin own about 11.3 percent of Alphabet (Google) but control 52.3 percent of voting rights. Similarly, Mark Zuckerberg owns about 13.6 percent of Meta but has 61.0 percent voting control.[3]"

Even if you missed the boat to GTFO by Jan 1 of 2026, you can still get the hell out and fight it out later in the courts from a different state. The decision tree, I'm assuming looks like this:

* leave before jan 1 and hope FTB doesn't decide you still were a resident. (6 known)
* leave after jan 1 but before law passes, bet on retroactive provision being challenged.
* stay, and pray that the proposition doesn't pass, or is modified and made null by one of the other propositions, or is somehow invalidated in the courts.

It is interesting to note that the 5% tax is designed chiefly to benefit healthcare. I can only assume the California legislature, realizing that healthcare has gotten a boon (to be paid over the next 5 years), will stall or reduce the rate of healthcare spending in the state during that time period, creating a situation where in 5 years they'll be screaming for tax increases in order to restore funding. And thus, a "one-time" or "temporary" tax becomes permanent.

https://oag.ca.gov/system/file...

"After accounting for administrative expenses as
provided by law, the Controller shall allocate and transfer the remaining
moneys in the Reserve Fund to the following sub-accounts, which are hereby
created: 90% to the Billionaire Tax Health Account and 10% to the Billionaire
Tax Education and Food Assistance Account. The moneys in the Billionaire
Tax Health Account and the Billionaire Tax Education and Food Assistance
Account shall be allocated as provided by law.
(e) Notwithstanding any other law, the Reserve Fund is a special fund,
permanently separate and apart from the General Fund or any other state fund
or account. The taxes and the moneys resulting from the Act shall not be
considered to be part ofthe General Fund, as that term is used in Chapter 1
( commencing with Section 16300) ofPart 2 ofDivision 4 ofTitle 2 of the
Government Code; and shall not be considered "General Fund revenues," "state
revenues," "moneys," or "proceeds oftaxes" under Section 8 ofArticle XIIIB
for the purposes ofany section ofArticle XIIIB, or Sections 8 or 8.5 ofArticle
XVI. Any revenue raised through the Act shall also not be considered "personal
income taxes paid on net capital gains" for purposes of Section 20 of Article
XVI. The taxes levied by this Act are not "ad valorem taxes on real property"
for purposes of Section 1 ofArticle XIIIA. To the extent any provision of
Article XIIIA would otherwise be construed to limit, restrict, or apply to the
rate, base, valuation, or imposition ofthe tax authorized by this Section, that
provision shall not apply to, and is superseded by, this Section.
Notwithstanding Section 16305. 7 of the Government Code, any interest or
dividends earned on moneys in the Reserve Fund shall be retained in the
Reserve Fund and used solely for the specific purposes set forth in this
subdivision and as provided by the Act."

I'm all for stuff that makes transitioning from one OS (Windows) to another (MacOS in this case) less difficult. Maybe they'll port it to linux next?

(a/k/a Innovation Subscribers Don't Need)

It still amazes me that, as late as the 1990's, and well after 56kbit modems were prolific, ISDN was being offered up by the ILECs as "broadband," at metered rates that made Ma Bell's long distance charges look like spare change.

Happily, it wasn't too long before ISDN was put out of everyone's misery when DSL showed up. And now, finally, after fifty years of pissing about, fiber is finally being pulled to the premises.

If you really need ongoing ISDN support, you can pull the source code from an old Git commit and update it. But I feel quite comfortable in opining: ISDN support will not be missed.