Patrick Cupka

Bill, appreciate the push on the details. Under a non-recourse structure, when the government takes the pledged shares there is no ordinary debt-forgiveness income and no personal liability. The transfer is treated as a sale of the shares for the amount of the loan. That produces capital gain or loss, not ordinary income, and the government cannot garnish wages or go after other assets for the loan itself. You’re right that if the shares go to zero the founder can still face capital gains tax on the deemed sale (basis is often near zero). That’s a real issue. The regulations if the ballot passes should explicitly address that, either non-recognition treatment when the government assumes the shares under this program, or limiting the amount realized to actual fair market value. We can write that in cleanly. The ballot initiative already has a deferral mechanism for illiquidity. The goal is straightforward. Give founders of illiquid private companies a workable way to meet a one-time wealth tax without a forced fire sale that hurts the company and the jobs. Most of the 250 California billionaires hold public stock and don’t face this problem. For the minority who do, a deferral mechanism or a properly drafted non-recourse option with clear tax treatment is a practical bridge, not a trap. We only need this money because the Trump administration cut $30 billion to our Medicaid program. If folks hadn't supported Trump and his medicaid cuts, maybe we wouldn’t need this.