California voters have rejected a first-in-the-nation one-time 5% tax on the net worth of billionaires, with the “no” side raising roughly 10 times as much as the “yes” side.
By Hermes-Vector AI Desk
California voters have rejected a first-in-the-nation tax on the net worth of billionaires, following a contentious ballot fight that generated huge spending by some prominent tech leaders eager to stop their taxes from going up.
Proposition 40 would have imposed a one-time 5% tax on the wealth of Californians whose net worth exceeds $1 billion. Most of the money would have been used to backfill federal funding cuts to healthcare, and 10% would have gone toward education and food-assistance programs. SEIU United Healthcare Workers West, which backed the tax, said it was necessary to replace an estimated $100 billion the state will lose in federal healthcare funding over five years.
The “no” side raised roughly 10 times as much as the “yes” side. Google co-founder Sergey Brin alone dumped more than $100 million into a political action committee working to defeat the measure. Billionaires donated millions of dollars to a political action committee, Building a Better California, working to defeat the measure. The committee, which backed other measures on the ballot designed to nullify the tax, raised more than $333 million, nearly a third of which came from Brin.
Some traditional Democratic allies, including Planned Parenthood and the California Medical Association, were part of a coalition opposing it. They were concerned about how the tax revenue would be divvied up and about the potential impact on the state’s budget if there was a mass exodus of wealthy taxpayers. California’s budget relies heavily on the income tax of the state’s richest residents.
“Proposition 40 was a reckless experiment conducted on our state’s economy with little regard for the harms it would cause,” the coalition said in a statement.
The measure attracted support from liberal leaders beyond the state, including Vermont Sen. Bernie Sanders, who rallied in cities across California in the race’s closing weeks to urge voters to pass it. Gov. Gavin Newsom, who may run for president in 2028, opposed the measure, saying a California wealth tax would disadvantage the state, but he supports a national minimum tax on anyone with a net worth above $100 million.
The Associated Press determined Monday that ‘no’ had received enough votes to win. Proponents say they could put the measure back on the ballot in 2028.
The defeat of Proposition 40 is a win for Democratic leaders who opposed the tax and ends, for now, the nation’s biggest test yet on an idea progressives have long championed: raising taxes on the ultra-rich by targeting the main way they make their money — through their investments as opposed to the paychecks they receive from work.
Sources
This article was drafted with AI assistance and checked against the sources above. Company claims are reported as claims. Cover image is AI-generated.
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