Rep. Ro Khanna’s wealth tax support fuels primary challenge in Silicon Valley

By Eliyahu Kamisher, Bloomberg

Representative Ro Khanna is facing backlash from billionaires for supporting a California wealth tax. Now a tech entrepreneur wants to turn that anger into a June primary challenge for Khanna’s Silicon Valley seat.

The bid by Ethan Agarwal, 40, is a long shot given Khanna’s national profile and campaign war chest of nearly $15.5 million. But Agarwal said he is counting on support from deep-pocketed tech executives such as Garry Tan, the CEO of Y Combinator, an influential startup accelerator, and venture capitalist Chamath Palihapitiya.

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Tan’s spokesperson Sam Singer confirmed he is donating to the campaign, but didn’t say how much. Palihapitiya said he hopes Khanna “loses his reelection badly,” but didn’t disclose if he’s contributing to Agarwal.

Khanna’s embrace of a proposed one-time 5% tax on California’s billionaires shattered his Silicon Valley support, said Agarwal, who has dropped his previous campaign for governor. The wealth tax was “the straw that broke the camel’s back, but it’s been fomenting for a long time,” said the Democrat, citing the congressman’s role in Bernie Sanders’ 2020 presidential campaign and his calls to set up guardrails around artificial intelligence.

The contest for California’s 17th Congressional District, one of the country’s richest, will test the ability of Khanna, 49, to bridge the tax-the-rich policies he has promoted nationally while reassuring tech executives that he is an advocate for the industry and for sustaining the AI boom.

“Ro has always welcomed competition and looks forward to a campaign based on ideas and what is best for the 17th district,” his spokesperson Sarah Drory said in a statement.

His balancing act came to a head in December when the progressive posted his backing for the tax on billionaire wealth in California, a proposal that rattled Silicon Valley but has yet to qualify for the November ballot. Google co-founder Sergey Brin and a group of fellow billionaires are bankrolling a series of competing California ballot initiatives that would nullify the proposed levy being pushed by a politically powerful health-care workers union.

“I have been completely shocked at how easily Ro betrayed his constituents,” Palihapitiya said in a statement. “Silicon Valley is the epitome of entrepreneurship, creativity and innovation. Ro is sadly none of these things.”

Following the backlash, Khanna, who’s considered a potential 2028 presidential candidate, tempered his endorsement by floating alternative proposals and saying the levy’s structure shouldn’t “undermine the innovation miracle of Silicon Valley.” He is also pushing the tech industry and labor leaders to meet this month to pursue a compromise agreement over the tax, which has divided Democratic officials in the state.

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Khanna has expanded his national presence by taking on a series of high-profile fights, including the release of the Epstein files and more recently trying to force the Republican-controlled Congress to end the war with Iran. On Monday, Khanna joined Sanders in pitching a national 5% annual wealth tax — sparking more Silicon Valley backlash.

Besides targeting his opponent over the tax, Agarwal plans to appeal to the South Asian community, which Khanna already counts on as a base of support.

The tech entrepreneur, who founded a fitness app and a financial management platform catering to young and wealthy customers, also characterizes Khanna’s stock trading as hypocritical since the congressman campaigns on easing inequality. Khanna has proposed a ban on congressmembers trading individual stocks.

Khanna made more than $55 million in stock trades last year, according to an advocacy group. The lawmaker has previously said that the trades are made by an independently managed trust.

“Khanna is focused on building his own national profile and is completely ignoring the needs of his district,” said Agarwal.

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