Andreessen Horowitz partner Josh Elman criticized California politicians over policies he says could drive startups and founders out of the state, pointing to Tesla Inc. (NASDAQ:TSLA) and Space Exploration Technologies Corp. (NASDAQ:SPCX) previous headquarters moves as California debates a proposed one-time 5% tax on billionaire wealth.
Elman Warns California Risks Losing Startups
"Why do California politicians want to push away startups?" Elman, a former Director of Product Management at Apple, wrote on X. "Over a short period, startups can create incredible numbers of new jobs and opportunities for so many? We already lost Tesla HQ and SpaceX HQ due to political shenanigans."
Elman was responding to Rep. Ro Khanna (D-Calif.), who defended the billionaire-tax proposal and argued that 72% of billionaire wealth is held in public stock. Khanna said he wants "a new social contract for this country," describing himself as a "progressive capitalist" seeking an economy "that works for everyone, not just the capital class in a few places."
Billionaire Tax Fight Divides California Leaders
The exchange follows Mark Cuban’s warning that he could make leaving California a prerequisite for some startup investments if the tax passes. Cuban said, "ideology is not a strategy." The November ballot measure, backed by SEIU Healthcare Workers West, would tax people worth more than $1 billion who lived in California on Jan. 1, 2026. Supporters say it could raise about $100 billion for healthcare.
Gov. Gavin Newsom (D) opposes the measure, arguing wealthy residents can relocate and weaken future tax collections. As noted by the Associated Press in April, California’s top 1% of earners, roughly 175,000 taxpayers, provide nearly 50% of the state’s personal income tax revenue. The nonpartisan Legislative Analyst’s Office estimates the proposal could raise tens of billions initially but later reduce annual income-tax revenue by hundreds of millions.
Tesla And SpaceX Shift Headquarters To Texas
Tesla moved its headquarters from Palo Alto to Austin in 2021 after Elon Musk criticized California regulations and taxes. SpaceX moved its headquarters from Hawthorne to Starbase, Texas, in 2024, after Musk called a California law the "final straw."
The companies have not abandoned California. Tesla later established its engineering headquarters in Palo Alto and operates its Fremont factory. California produces nearly 15% of U.S. GDP, according to the state.
Elman, who joined a16z to invest in consumer technology and AI, framed the debate around startup growth: policy choices, he argues, can shape where founders decide to build and hire.
Photo courtesy: Samuel Boivin / Shutterstock.com
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