Pirate Wires' Blake Dodge on California's billionaire wealth tax: retroactive structure is driving an exodus

we're at but

well we are at the point in the show where we will bring in our first [music] guest Blake Dodge from Pirate Wires you can go and subscribe Ride at piratewires.com. Blake, welcome to the show. How are you doing?

What's happening?

I am great. How are you guys?

We're fantastic. Uh, what has been keeping you Oh, well, first introduce yourself since it's the first time on the show. Uh, I'd love a little bit of your background and then some of what you've been focusing on at Pirate Wires recently.

Yeah, totally. So, um, I basically started my career as a journalist at Business Insider.

Oh, cool. Um, I covered healthcare and then technology. I was doing like big scary investigations with a lot of documents and,

you know, secret sources and stuff. Um, uh, and I got a little bit [sighs and gasps] not burned out, maybe a little bit burned, I wanted to tell more optimistic stories about what was going on in tech.

Yeah. Um, and so that's why I joined Pirate Wires about a year ago. Um, where I've done a lot of that work kind of like the white pill case for why you should believe in someone. Um, but then we also do we do a lot of work that I think centers original thought.

Um, and maybe the kind of in the spirit of the contrarian.

Yeah. will look at an issue, what everyone else is saying, and then kind of tell people, "Actually, but actually, uh, this [laughter] is what you should think."

Truth.

Um, yeah. And so lately, we've been doing a lot of that with the proposed wealth tax.

Sure.

In in California, um, we've kind of flooded the zone there and been duking it out actually with the New York Times and the Wall Street Journal. So, I kind of feel like I'm back at BI all of a sudden. [laughter]

Exactly. Well, yeah. What has been the response? I mean, you've interviewed a ton of uh billionaires in California. It feels like the base case is just like everyone leaves. Like maybe they're not all loud about it, but you know, Mark Zuckerberg's not out there, but like he did buy a place in Miami and it seems like he might be a Miami resident soon.

Yeah, there's there's kind of two waves. There's people that were like, I'm going to get out in 2025 so I never have to pay the tax. And there's a second wave which I think is the Mark Zuckerbergs that are like I like if this goes through it'll get fought. I might not have to pay it but then I'm still kind of like

potentially hedging

and getting out. And so I think there's again this is we're kind of in the midst of the second wave of people that are like I might have to pay it once but I'm certainly not going to pay it every year for the rest of my life.

Yeah. Yeah. A couple weeks ago, Mike Salana published a piece where he interviewed more than 20 billionaires in the state of California, which just like,

wow. Um, might make him the most well sourced tech journalist ever, but they literally all said that they were leaving or planned to leave.

Um, so that's really striking. That's like a meaningful percentage of the total billionaires in California. And what's really interesting is they're not they may be leaving because they don't want to pay the tax, but actually the tax is retroactive. So many of them many of the folks who are leaving probably will still have to pay it if it goes through, but they're leaving anyway because of the kind of overarching political landscape of California. like they're they're just kind of over it

and they find the kind of lefty politics to be too risky

not only to build wealth but to build companies.

Sure. Um there's language in the proposed ballot measure that has really thrown people through a loop where so the government has this challenge of tallying people's net worth you know which is not easy. Um when it comes to founders of private companies they're using kind of a shortcut where founders will be presumed to be owners of anything they control. Mhm.

You guys have probably seen the scary math with this. Yeah.

On your timelines, but

basically since founders often have their shares often come with outsized voting rights.

Yep.

What this means is you could be presumed to be an owner of 10 times the value of your actual economic position.

Yeah.

Um and that's all subject to a rebuttal process and stuff. It's not supposedly meant to be the final word. Um but I think founders hear that and it's like okay like this is this is a significant risk um to to to the business and to my longevity in the state.

How are you thinking about the probability that this actually passes? It feels like something that would be broadly popular amongst a direct in a direct democracy scenario. I saw some protests that did not seem very widely attended. And so it [laughter] doesn't it seems like it's hard to marshall 50 million people or 10 million people that are against this uh because it's not a tax that affects everyone.

Yeah. Yeah. The probillionaire protest for some reason was not well attended [laughter] um in San Francisco. I have no idea.

Certainly not by billionaires. [laughter]

Yeah. It's like Gary Tan with like one sign. Um,

did Gary go? I don't think he won. [snorts]

I actually don't think he went. Um, yeah. So, the politics on the other side are a bit better. Um, because the headline of this whole thing is let's tax billionaires 5% of their net worth one time

for this like um, you know, emergency

of paying for healthcare for poor people. And so for Medicaid,

yeah.

And so I think that does have a certain political appeal if it does make it on the ballot. We're sort of hearing like mixed reviews on its chances. Um Mike did some reporting that went out just today actually that suggests their signature gathering may be a little bit behind. Um, and then you have a a ton of opposition in state. Like Gavin Newsome hates this thing.

He's been meeting with Dave Reagan, the head of the union who sponsored the ballot measure to try and get him to stop. Um, there's also like teachers unions and kind of some surprising adversaries.

Well, yeah, there's other unions that are like, "Hey, you're going to you're you're trying to you're you're trying to get this tax for purely your own benefit. Like, we you got to cut us in." So, it's like the unions, even if they might have been in favor of it, if they were going to get a piece of it, there's there's quite a number of groups that are just saying like, I don't want this to happen if I'm not getting that [laughter] piece. Right. Is that is that

actually that is kind of how it works. Yeah. Um because the unions and different special interests use the ballot proposition process to raise money like or to to to get more funding streams. And um Mike learned specifically that the teachers union is feeling kind of left out in this particular scenario.

Um

how how have the um

how how has Reagan reacted to everyone leaving?

Are they are they processing this? Because because you know play this out.

Yeah. You have a number in mind. You're like, I'm getting 5% of 60 people's wealth and that's probably like a couple billion dollars. And then there's only And then 20 leave and you're like, okay, now I'm getting like three billion. And then another 20 million, you're like, now I'm getting one billion.

Yeah. There's also an insane power loss.

Yeah. Right. Oh, yeah. Sure. So So

the biggest ones leave.

People the people that stay might be the

the guy who's at 1.2 is like, I guess I'm good for my 20 mil. [laughter] You can take it.

Yeah. I mean, so far the the folks behind the ballot measure have not acknowledged that people are actually in fact leaving. Um, they continue to call Wealthflight largely a myth.

Um, which is crazy. We'll be talking to these people on Twitter like we literally spoke to to 20 of them. They literally are leaving the state. It's not a myth. But they point to research um mainly looking at the movement of millionaires and just generally wealthy people after taxes are increased and it's [clears throat] true that in those cases there's not a lot of mobility

but I think they have

made part of the strategy are the same.

Yeah. is is part of the strategy that uh this is the best possible branding for attacks like this and and this type of like campaign focused on billionaires one time is how you get something like this passed. Then once it's passed, you'll have the ability to kind of like reduce uh reduce the set of requirements to qualify for it and you can eventually get down and be um eating off of the plate of all Californians, middle class, etc. Yeah, I'm actually I'm staring at a quote um that I have here in my last story. There's a couple of academics whose work like heavily influenced this wealth tax and pretty much all wealth taxes globally. Um one of those men is advocating for a 2% globally coordinated billionaire tax where all of the countries kind of get together and agree they're going to do this. Um,

sort of like a one world government. [laughter]

I literally in this quote have a screenshot of Michael Gibson's

Oh, yeah.

summary of the Teal Antichrist lectures. Um,

so yeah, he says it's clearly far from enough, but also what history shows is that what's most difficult is to move from zero to something positive. And once you have something positive, even if it's 2%, then it opens up a realm of possibilities.

And so they say it's one time, they say it's an emergency, but

clearly

Yeah.

What uh what's the takeaway from the Netherlands? They passed this 36% unrealized capital gains tax. It's it it excludes, I think, real estate and startup equity, but uh what's the thought process there? It seems super bearish for the country as a whole, but uh any any learnings?

I haven't looked at that one specifically. I know that internationally these wealth taxes do have a pretty um dismal outlook.

Uh the cycle is kind of

it's very American to be like, "Nah, we can make it work. [laughter]

We're built failed everywhere else, but it'll work here."

Yeah. And it's funny too, this this the um they're still saying wealth flight is a myth, but part of why these other wealth taxes tend to go poorly is because the wealth leaves.

Yeah.

So,

can you give us a white pill? Something that uh I I don't think uh from a comp's perspective, don't tax me is going to be effective for the billionaire class. But what should they be focused on in a world where a lot of people are seeing billions of dollars in wealth creation from what they see as slop, what they see as scams, what they see as, you know, a variety of, you know, water usage, energy, energy price, blah blah blah. Uh what what are the white pills that you think tech has delivered or is in the process of delivering over the past few years and into the future? Yeah, I mean that's the question of the hour because inequality isn't, you know, continues to get worse

and kind of fuels the politics behind these things.

Yeah.

Um I'm kind of a Gundo Stan. Like I I believe in this

Yeah.

patriotic vision for tech.

Yeah. And this idea of keeping regular people in mind and um building businesses that last and create value and don't just kind of addict people to things that they shouldn't be doing or shouldn't be spending their money on.

Um and I think you know who knows what billionaires could do. Like there's a lot of ideas out there. Mike Salana actually just wrote a Christmas wish list for billionaires with like 20 of these really beautiful white pill ideas.

Yeah.

Um, one of the easiest things is, you know, building like beautiful public works, libraries, statues, like things that people can see with their own eyes and feel gratitude about. Whereas right now, I feel like

it's like it's not that compelling to be like, "Don't hate me. I built this short format." [laughter] instead of like the public library, it has the Rockefeller name on it or something like there's a lot of examples as you walk through New York City where you see a beautiful building and you're like, "Oh yeah, and that's free to the public now." Uh I I I'm a big fan of like the Hurst Castle. Like William Randph Hurst like just built this castle for his entire life, spent all his money, died before it was even done, and then just

or even in California the the uh like really ramping up something like an adopt a highway program like driving around LA,

the roads are just so so so bad.

Yeah.

But the tangible Yeah. the tangible thing that you can see is is very very it's very impactful as opposed to like the the the anonymous donation that just sort of works its way through the economy. Might be more impactful but certainly less grounded in reality.

Anyway, where can people find you? Uh sign up for Pirate Wires, follow you on Axe. Where else are you active?

Yeah. Yeah, I'm on XDBlake. Uh piratewires.com. Fantastic. covering all this stuff every week. Um, we've really flooded the zone and

Yeah. And I I feel like too we

we're we're pro tech in the sense of not being anti.

Yeah.

But we also tend to ground things in a set of values. Um, which I think is a little Well, I love it personally.

I'm glad. That's fantastic. Great.

Well, thank you so much for taking the time to come chat with us and we will talk to you soon.

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