LT Capital Gains are taxed at 34.1% in California once this bill passes. 15% + 5% 2010 increase + 9.3% CA + 1% CA Mental Health + 3.8% Health Care capital gains.

ST Capital Gains will be taxed at 39.6% top income bracket + 5% surcharge + 9.3% + 1% + 3.8% once this bill passes. 58.7%. (A $20m sale of a startup in less than 12 months start to finish is kind of unrealistic, but you could easily be a mezzanine investor, or could have operated a business for a long time before formally doing stock, so it is possible, if not likely for an actual entrepreneur)

The correct thing in both of these cases is probably to hold and write options or something against stock, to avoid realizing the gain, and hope that somehow tax rates rationalize in the future.

20-25% all-in capital gains is probably the limit before it seriously disincents investment.