California voters decide on Tuesday (November 3) whether their state should become the first in the US to tax the net worth of billionaires, in one of the most expensive ballot fights in the state's history, The Hindu reported. Results are expected after polls close in California, which will be Wednesday morning in India.
Proposition 40 would impose a one-time 5% tax on the wealth of Californians worth more than $1 billion. Most of the money would go towards making up for federal cuts to healthcare funding.
Who is for and against
The measure is led by the SEIU United Healthcare Workers West union, which estimates California will lose $100 billion in federal healthcare funding over five years. Senator Bernie Sanders has campaigned for it as a step towards curbing wealth inequality.
Democratic Governor Gavin Newsom opposes it, warning that the state's richest residents would leave and take their taxes with them. He backs a national minimum tax on people worth more than $100 million instead. Some traditional Democratic allies, including Planned Parenthood and the California Teachers Association, are also in the coalition against it, worried about how the money would be shared and about the state budget if wealthy taxpayers leave. California's budget relies heavily on income tax from its richest residents, The Hindu reported.
The "no" side has raised roughly 10 times as much as the "yes" side, mostly from tech founders and venture capitalists.
What the polls say
The last survey by the Public Policy Institute of California (PPIC), taken October 16-22 among 1,086 likely voters, found 46% planned to vote yes and 52% no, with 2% undecided, The San Francisco Standard reported. The margin of error was 3.8 percentage points. In September, the same pollster had the tax ahead by the same margin, 52% to 46%.
"Since last month, we've seen declining support for Prop. 40, particularly among Democrats and independents," PPIC survey director Mark Baldassare said.
The catch: two rival measures
Even if Prop 40 wins a majority, it would be blocked if either of two rival measures on the same ballot passes with more "yes" votes. Prop 42 would ban new state taxes on personal property such as investments, and Prop 41 would block new taxes that get around the state's spending cap. In the PPIC poll, Prop 42 had 51% support and Prop 41 was tied at 48% to 49%.
The committee behind them, Building a Better California, has raised more than $333 million, about 30% of it from Google co-founder Sergey Brin, The Hindu reported.
Why it matters
Billionaires are already reacting. Mr Brin and fellow Google co-founder Larry Page began cutting ties with the state after the measure was unveiled, while Meta's Mark Zuckerberg said he would stay in California and made a deal with Meta to help him pay the tax without losing his stake, according to The Hindu. Backers say the fight matters beyond California whatever the result. "We are showing other States that you can look them in the eye, you can look these billionaires in the eye, and take them on," said Lorena Gonzalez, president of the California Federation of Labor Unions.