Cuban tells Khanna 'you don't understand business' in Calif. tax clash

Khanna proposed a workaround. Founders whose wealth is tied up in private-company stock could pledge those shares as collateral for a non-recourse government loan to pay the tax, he wrote. The loan would run roughly 10 years. If the founder could not repay, the state would take the shares. The founder would not be personally liable if the company failed.

Cuban rejected the idea. California would effectively lend founders money that immediately returned to the state as tax revenue, producing no net cash gain from those taxpayers. And if founders could not repay, the state would end up owning stakes in private companies.

"Cali, You make it. We take it!" Cuban wrote.

Khanna said the loan mechanism was aimed at a narrow group. He claimed 72% of billionaire wealth is held in public stock and said the state would collect from the vast majority of billionaires with liquid assets. The financing proposal was for true "paper billionaires" whose fortunes are tied to illiquid holdings, he wrote.

"Mark, come on a road trip with me around California, Pennsylvania and the country and ask ordinary Americans how they feel about a billionaire tax," Khanna wrote. "Most say, I promise you, why only 5 percent?"

Cuban shot back: "You don't understand business Ro."

A successful founder could spend 10 years growing a company, create thousands of jobs and pay hundreds of millions in federal and state taxes without ever having $250 million in liquid assets to repay the proposed state loan, Cuban argued.

"Is that what you want your state to be?" he wrote.