California needs money from three companies that don't trade publicly yet. SpaceX, OpenAI, and Anthropic might go public. The state already spent the windfall in their budget projections. Classic move.
Experts warn the tax revenue might not materialize as planned. You know what that means. The experts have no f*cking idea either. They're just hedging so they can say they called it both ways. "Several factors are complicating the equation" translates to "we wrote IPO bonuses into the budget and now we're realizing stock options vest over time and employees might move to Texas."
SpaceX IPO'd at a valuation that makes California's comptroller salivate into his ergonomic keyboard. OpenAI's employees hold paper worth billions. Anthropic's engineers are one liquidity event away from buying half of Marin County. The state sees this and thinks it's found a new revenue stream. They've mistaken a maybe for a mortgage payment.
The complications include timing, employee location, and the fact that rich people hire accountants who've read the tax code. California tax policy assumes everyone just stands there and gets fleeced. Works great until the fleece hires a CPA with a Nevada LLC and a creative interpretation of residency rules.
Retail traders will read this headline and think they should buy California municipal bonds. They'll assume the state knows something they don't. The state knows nothing. The state is counting other people's unrealized gains and calling it a budget. That's not fiscal policy. That's a vision board.
Three companies might go public. California might collect taxes. Experts might be right that it's complicated. Everyone involved is performing financial astrology with a straight face and a pension they're confident you'll fund.
Photo by Leo_Visions on Unsplash
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