Khanna Seeks Bipartisan Probe Into State-Level Fraud Amid California Wealth Tax Dispute

U.S. Rep. Ro Khanna is organizing a bipartisan investigation into state government fraud in response to backlash over his recent support for a proposed wealth tax targeting California billionaires. The Silicon Valley Democrat said the initiative, to be launched from his position on the House Oversight and Government Reform Committee, aims to ensure any new tax revenue is directed to health care and other essential services rather than lost to misuse.

Khanna’s announcement followed criticism from technology donors and industry allies after he endorsed the 2026 Billionaire Tax Act, a ballot measure that would impose a one-time 5 percent levy on the assets of Californians whose net worth exceeds $1 billion. Labor organizers from the Service Employees International Union–United Healthcare Workers West are collecting signatures to place the proposal before voters in November. Opponents argue that taxing unrealized gains would penalize startup founders whose wealth is largely tied to illiquid private stock and could prompt an exodus of high-net-worth residents.

The congressman said restoring public trust is a prerequisite for any expansion of government programs or revenue streams. To that end, he intends to recruit a Republican colleague and request a Government Accountability Office report on fraudulent activity in state programs nationwide. Khanna also plans to convene hearings to examine how fraudulent claims, mismanagement, or corruption divert public money. By working across party lines, he said, the inquiry can avoid being framed as an attack on either Democratic- or Republican-led states.

Interest in state-level fraud has intensified in recent months. In California, the State Auditor published findings pointing to potential irregularities in several departments. In Minnesota, federal and state prosecutors have secured indictments—first announced in 2022—involving an alleged scheme to siphon funds from a pandemic-era nutrition program. Republican lawmakers, including House Oversight Committee Chair James Comer, have asked Minnesota officials to testify about the case. Khanna said his investigation would study these and other examples to recommend safeguards preventing similar losses elsewhere.

The wealth tax question has exposed fissures within California’s technology community. Some executives have threatened to back a primary challenger against Khanna should the measure advance, while others have warned they may relocate to states with lower tax burdens. Venture capitalist Chamath Palihapitiya, a prominent critic of the plan, argued online that new taxes should come only after comprehensive audits and “zero-based” budgeting eliminate waste.

Khanna acknowledged concerns about liquidity for founders whose shares remain restricted or whose companies are not yet profitable. He indicated that any wealth-tax framework should include mechanisms allowing taxpayers to meet obligations without forcing premature stock sales. Nevertheless, he maintained that additional revenue is necessary to cover projected shortfalls in California’s health-care budget and to advance broader goals such as universal health coverage.

Imagem: Internet

The political stakes extend beyond California. Minnesota Governor Tim Walz, a Democrat up for re-election in 2026, faces continuing scrutiny over the fraud allegations in his state. At the federal level, Khanna has recently collaborated with Rep. Thomas Massie of Kentucky on transparency legislation related to the late financier Jeffrey Epstein, demonstrating a willingness to build cross-party alliances. He said he hopes to replicate that model in the forthcoming fraud inquiry, emphasizing that effective oversight is critical to persuading voters that new taxes will be spent responsibly.

For Californians, the immediate timeline centers on whether the wealth-tax initiative qualifies for the ballot. If supporters gather the required signatures, voters will decide next year whether to authorize the unprecedented levy on billionaires’ assets. In the meantime, Khanna’s proposed investigation seeks to address a central argument of critics: that without stronger safeguards, additional tax revenue could be squandered. The outcome of the probe—and the reception it receives from both parties—may influence the broader debate over tax policy, government efficiency, and the future of progressive spending priorities.

Additional context on federal oversight functions can be found at the U.S. Government Accountability Office, the non-partisan agency frequently tasked with auditing public programs and expenditures.

Crédito da imagem: Annabelle Gordon | Reuters