00:03:42 · Ruby Justice Thelot
[00:03:42] S1: Right. So it seems like this will probably not pass. And even if it does pass, it can be overridden, I believe, by either of Prop 41 or 42 or by courts or something. So Kalshi predicts that it's only like a 10% chance of actually being enacted by January 1. But regardless of this, if Democrats win both houses of Congress and the presidency in 2028, what do you think are the prospects for a potential national wealth tax? Like, Senator Elizabeth Warren, for example, has proposed a 2% wealth tax on all net worth annually on all net worth above 50,000,000 and six percent on all net worth above 1,000,000,000.
00:04:23 · Joshua Rauh
[00:04:23] S0: They are definitely talking about this. And... But what's going on in California right now, it's it's it's really just foreshadowing the discussion that we're gonna have on the national level about this. And I I think for a lot of your MTS viewers, you know, one of one of the, I think, very important aspects of of these wealth taxes to pay attention to is the fact that they tax intangible wealth, and includes the value of startups, enterprises. The California one actually Prop 40 is very clear that it taxes it based on the implied owner's share of the post money valuation of any company. And so what does that mean practically? Elizabeth Warren, Ro Khanna, proposing wealth taxes not at a billion dollars, but at $100,000,000 or $50,000,000 And so when people say to me, why should I care about wealth taxation? These billionaires, they can pay a few percent of their wealth more. When you think about the startup ecosystem and the kinds of structures that that relies on, wealth taxes are gonna be very damaging, not only for unicorn billion dollar firms, but when this discussion starts getting going about taxing wealth at 50,000,000 or 100,000,000, you know, at Stanford, I I I often get this from students who say, well, look, billionaires, they can afford to pay more or wealth tax. If somebody has 100,000,000, they can afford to pay more. I just say, look. Do you know anybody who's, you know, raised some raised some venture capital? Oh, yeah. Yeah. I know somebody who raised a series a. Oh, yeah. Well, how much did they raise? They did great. It was 5,000,000 at a $50,000,000 valuation. Well, I got news for you. I mean, that person, according to the state, would be worth $45,000,000. And, you know, they would owe wealth taxes on that money. Where is that gonna where is that gonna come from? So I think for for for founders, entrepreneurs, for your viewers, you know, really important to to to to think about how wealth taxes are gonna potentially interact with the startup ecosystem. I think there are gonna be some challenges there.
00:06:24 · S2, Ruby Justice Thelot
Ad[00:06:24] S2: I wanna shout out our sponsor, Lovable. You know the app you've been meaning to build? The internal tool, side project, or product you'd otherwise lose a weekend to? With Lovable, you get software you can ship today. That includes an editable code base you can inspect and change plus two way GitHub sync. Lovable also handles the backend and infrastructure including managed Postgres, auth, storage, hosting, payments, and more so you don't have to wire it all up yourself. And through Lovable's MCP server, you can create and deploy your project directly from the agents you already use. Turn ideas into software people love with Lovable. Lovable. Dev. Now on to the episode. [00:07:03] S1: Well, yeah, there's there's a lot of consideration around different taxes. Aside from just the wealth tax, I mean, California has all of these ballot props around different kinds of taxes. I think the most interesting ones are San Francisco Prop H, which would levy a new parcel tax on real estate for the muni, and the local Bay Area regional transit measure, which would add a sales tax for transit, including, and especially the BART, which has suffered pretty dramatically under lack of funding and a lack of ridership since COVID. So what do you think are the... What do you think will happen to our transit systems in the Bay Area if, for example, the regional transit measure were to not pass?
00:07:57 · Joshua Rauh
[00:07:57] S0: Well, it's interesting because this is the kind of standard way that that ballot propositions to to raise money are done. Know, they say, we we wanna raise money for a very specific thing. As as you mentioned, you know, a parcel tax to fund the muni or, you know, a specific sales tax increase to fund the BART. The sort of message behind it kind of a threat. The message is if we don't raise these taxes, we're gonna lose we're gonna lose things that you voters like, public transport. This is also done in the context of of education a lot. Right? You know, the the prop... Proposition three as well on the on the ballot would make permanent the temporary income tax increases that came in, around, 2012, 2013. So so so... But we've gotta look at the whole big financial picture of the, of the of the of the state and of the localities. You know, the the state of California is... Has got a lot of money right now. And they have a lot of unfunded liabilities for pensions, and they have a lot of costs. But if you look at how much money the state of California is spending, you know, in its current budget relative to 2019, it it... It's up 72% since 2019. So the the the state is spending a lot more than it was before COVID. And, you know, this goes back to discussion around proposition 40. Proposition 40, the billionaire tax, one of the arguments for it says, we need to raise a... This this this would raise a $100,000,000,000. And we we actually don't think it's gonna raise anywhere close to a $100,000,000,000, and our our work suggested it's actually gonna lose money for the state. But but, you know, let let... Let's let's look at the premise. Do we really actually need to raise additional additional resources? If you look at spending of the of the general fund of the state government, of all state government activities, spending on medical, on specific things, they're all way up over the last seven years. And so you have to actually ask the question, you know, where is the money really going? And and I think that is... That's kind of the focus that I I try to bring to these to these questions. Where where where is the money going? We can... You can talk about raising revenue from various things, you know, closing loopholes. Nobody wants a tax system that's full of all kinds of loopholes that people can people can exploit.
00:10:15 · Joshua Rauh, Ruby Justice Thelot, S3, S2
And, you know, if that's going on, you know, we gotta find ways of closing that. But but if you just look at how much money the state's actually bringing in and localities as well, they're... It's... It doesn't seem like there's a revenue problem. It seems like there's a spending problem. [00:10:32] S1: Right. Well, we'll see what happens with these taxes. It's been very interesting having you on. Joshua, thank you so much for coming on MTS. [00:10:40] S0: Thanks, Theo. Great to be with you. Ad[00:10:44] S3: A huge thanks to MTS sponsors. Ad[00:10:46] S1: ElevenLabs, AI that communicates at human level across every channel and modality. 11labs.io/mts. Scale your startup on Neon. Millions of developers and startups have already chosen Neon for their back end. Start on the free plan or get up to a $100,000 in credits for your startup at neon.com/mts. Special thanks to our sponsor, Kong, the AI connectivity platform. Connect APIs, LLMs, agents, and systems with serious security and governance. Konghq.com. Ad[00:11:17] S2: Finally, prove what your AI investment is worth with Larridin. Head to lairdon.com today to start measuring your AI's bottom line. MongoDB, trusted to run critical applications by 75% of the Fortune one hundred, the intelligent data platform for the era. Apply today for access to up to $15,000 in Atlas credits, dedicated technical support, and exclusive events and go to market opportunities. Mongodb.com. Chargebee, billing and monetization infrastructure for the AI era. Chargebee.com.
00:11:17 · S2, S3
Ad[00:11:17] S2: Finally, prove what your AI investment is worth with Larridin. Head to lairdon.com today to start measuring your AI's bottom line. MongoDB, trusted to run critical applications by 75% of the Fortune one hundred, the intelligent data platform for the era. Apply today for access to up to $15,000 in Atlas credits, dedicated technical support, and exclusive events and go to market opportunities. Mongodb.com. Chargebee, billing and monetization infrastructure for the AI era. Chargebee.com. Ad[00:11:49] S3: Blitzy, autonomous software development for enterprise code bases. Ship 5x faster. Blitzy.com. AdQuick, make your brand a billboard out of home advertising as easy to scale as digital. AdQuick.com. Arena, measuring AI performance in the real world. Arena.ai. Support for the [00:12:08] S2: show comes from VCX, the public ticker for private tech. The US stock market started history's greatest wave of wealth creation. From factory workers in Detroit to farmers in Omaha, anyone could own a piece of the great American companies. But today, our most innovative companies are staying private longer, which means everyday Americans are missing out. Until now. Introducing VCX, a public ticker for private tech. Visit getvcx.com for more info. That's getvcx.com. Carefully consider the investment material before investing including objectives, risks, charges, and expenses. This and other information can be found in the innovations fund prospectus at getvcx.com. This is a paid sponsorship.