Billionaire David Friedberg on why taxing California rich won't fix the real problem: ‘the uncomfortable truth is…’

Billionaire investor David Friedberg has criticised the narrative that taxing the ultra-wealthy will help the government to address massive projected funding shortfalls for healthcare (Medi-Cal) and education, arguing that while tax loopholes exist, the math simply doesn't add up to save California’s budget. Friedberg, in a conversation with AI czar David Sacks and venture capitalist Chamath Palihapitiya, said explained how billionaires avoid taxes: the “Buy, Borrow, Die” strategy.“It’s totally reasonable to say billionaires aren’t paying their fair share — but the uncomfortable truth is why. Ultra-wealthy individuals don’t live on income, they live by borrowing against assets. No sale, no capital gains, no tax. That’s the loophole nobody wants to say out loud,” he said in a video, shared by Ian Miles Cheong, on X (formerly Twitter).He argued that if policymakers were interested in closing this gap they would have to take a different approach: Implement a tax on borrowed funds that are secured by unrealised gains.“The issue isn’t income tax — it’s asset-backed borrowing. When someone can live tax-free by borrowing against billions in untaxed assets, the system is broken. If policymakers were serious, the fix is simple: tax borrowed money tied to unrealized gains,” he added.He pointed out that the state is facing an estimated $1.5 trillion in long-term obligations and one-time tax income of $100 billion would barely be a solution.“California has ~200 billionaires worth $2 TRILLION combined. A 5% one-time tax raises $100B — sounds big until you realize the state is staring at a $1.5 TRILLION liability hole. Taxing billionaires doesn’t solve the problem. Spending does,” he added.“Even if you confiscated billions from every billionaire, it wouldn’t fix government debt. This debate pretends revenue is the issue — it’s not. The real crisis is uncontrolled spending and liabilities already baked into the system,” he noted.Rrecently, Sacks said, "California has become a hostile work environment for founders."