A lopsided spending battle and a fractured Democratic coalition helped sink California’s Proposition 40, a first-of-its-kind wealth tax targeting the state’s billionaire class.
Opponents of the measure, led by Google co-founder Sergey Brin, outspent supporters by at least five to one, flooding the campaign with resources drawn from wealthy Californians united against the proposal.
Brin also engineered a parallel strategy, driving two additional ballot proposals designed to block the tax from ever taking effect, even if voters had approved it.
The Associated Press called the race for opponents, confirming that California voters rejected the initiative to impose a one-time 5% tax on most billionaire wealth held in the state.
Backers of the measure, led by the SEIU-UHW healthcare workers union, had argued the tax could generate as much as $100 billion to shore up healthcare programs.
Advocates framed the proposal as a direct response to federal policy, arguing that a Republican-controlled Congress had slashed healthcare funding to finance tax cuts for the wealthy, leaving states to absorb the damage.
California, home to more than 200 billionaires by most estimates, was seen by supporters as uniquely positioned to act where Washington had failed.
The measure’s defeat, however, owed as much to Democratic dissent as to opposition spending, with the party splitting publicly over the question of taxing extreme wealth at the state level.
Governor Gavin Newsom broke with his own party’s official position, opposing Prop 40 on the grounds that wealth taxation should be addressed through a national framework rather than state-by-state.
Xavier Becerra, the Democratic candidate for governor, also came out against the measure, deepening divisions within a party that otherwise dominates California politics.
A leading teachers union added to the opposition, arguing that the proposal set aside only a small fraction of projected revenue for schools, making it a poor deal for education.
On the other side, Rep. Ro Khanna of California and Sen. Bernie Sanders of Vermont both backed the measure, with Sanders traveling to the state to campaign actively on its behalf.
Sanders and Khanna argued that concentrations of billionaire wealth had grown unchecked while public services deteriorated, and that California had both the means and the obligation to act.
The result leaves healthcare advocates without a funding mechanism they had hoped would compensate for federal cuts, and renews questions about whether any state-level wealth tax can survive well-financed opposition.
