California votes on first state tax on billionaires’ wealth

California voters cast ballots Tuesday on whether their state should become the first in the nation to tax billionaires on their net worth, a fight that has split Democrats and left some of the richest residents weighing whether to leave.

Under Proposition 40, residents worth more than $1 billion would owe a single 5% levy on their wealth. Most of the money would go toward making up for federal cuts to healthcare funding.

Even a majority yes vote may not settle it. Two rival measures on the same ballot are designed to cancel the tax, and if either one passes with more yes votes than Proposition 40, the wealth tax would be blocked.

Those countermeasures are backed by a political action committee called Building a Better California. One would bar new levies on financial assets and other personal property, a category that leaves out real estate. The committee has raised more than $333 million, roughly 30% of it from Google co-founder Sergey Brin.

Money and shifting polls

Across the campaign, opponents have outraised supporters by about ten to one, with tech moguls and venture capitalists pouring millions into a committee working to defeat the tax.

Public opinion has flipped. A mid-October survey by the Public Policy Institute of California found 52% of likely voters opposed and 46% in favor, the reverse of the institute's early September results.

Some billionaires have already acted. Brin and fellow Google co-founder Larry Page began cutting ties with California after the proposal was unveiled, while Mark Zuckerberg said he would remain in the state for eight years and reached a deal with Meta to help him pay without giving up his ownership stake.

Democrats split over the tax

The campaign for the tax is led by the labor union SEIU United Healthcare Workers West, which projects that California will lose $100 billion in federal healthcare money over five years.

Vermont Sen. Bernie Sanders, who held rallies in California cities last month, has cast the measure as a major step against wealth inequality. He and Massachusetts Sen. Elizabeth Warren have long pushed for a federal wealth tax.

Democratic Gov. Gavin Newsom opposes the measure, warning that the wealthiest Californians would move away and take their tax payments with them. He backs a national minimum tax on anyone worth more than $100 million and called Sanders' focus on inequality spot-on, while saying the two fundamentally disagree on this proposal.

Planned Parenthood and the California Teachers Association, usually Democratic allies, have joined the opposition coalition. They worry about how the revenue would be split and about the budget fallout if wealthy taxpayers leave, since the state leans heavily on income taxes paid by its richest residents.