California stands to gain a significant increase in tax revenue from the recent SpaceX initial public offering, along with the upcoming public listings of AI companies OpenAI and Anthropic.
Still, experts caution that these gains might not be on par with those from previous tech IPOs when you consider the valuations.
SpaceX just made its debut on the Nasdaq last week with a valuation around $2.5 trillion, creating a lot of paper wealth for its employees in California.
OpenAI and Anthropic are also gearing up for their public offerings later this year, and their valuations could get close to $1 trillion. This wealth surge has drawn comparisons to Meta Platforms' IPO in 2012, which brought in about $1.3 billion in tax revenue for California when it was valued at roughly $104 billion.
That said, analysts point out that contemporary pay structures and tax strategies may lessen the immediate effect on state revenues. Many employees at SpaceX have already paid income taxes on their stock awards prior to the IPO.
This is different from older dual-trigger restricted stock units, which tend to create hefty tax bills when a company publicly lists.
Moreover, employees at top startups are increasingly turning to tender offers, stock sales, charitable donations, and loans backed by private stock to help manage their tax burdens.
Despite all this, California officials are optimistic that the upcoming wave of tech IPOs will still bring in a notable amount of tax revenue, though it's tough to say exactly when and how much.
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