California voters have rejected Proposition 40, a ballot measure that would have imposed a one-time 5% tax on most of the wealth held by the state's billionaires, according to a race call by The Associated Press. The outcome marks a defeat for a proposal that supporters argued could raise $100 billion for healthcare and that became a flashpoint within the Democratic Party in a state where Democrats hold a heavy registration advantage over Republicans.
The campaign behind the measure was led by the Service Employees International Union-United Healthcare Workers West, known as SEIU-UHW, a union representing healthcare workers. Advocates contended that a Republican-controlled Congress had cut healthcare programs in order to provide tax breaks to the wealthy, and that California's affluent residents should therefore help fill the funding gap. Estimates of the number of billionaires in the state exceed 200, with some counts placing the figure at a few hundred.
Opponents countered that the tax would prompt wealthy residents to leave California, reducing state revenue and damaging the broader economy. The measure also divided the state's Democratic leadership. The California Democratic Party endorsed Proposition 40, and U.S. Rep. Ro Khanna, D-Calif., and Sen. Bernie Sanders, I-Vt., both backed it, with Sanders traveling to the state to campaign on its behalf.
On the opposing side stood Gov. Gavin Newsom, a Democrat, who argued that a national tax on the wealthy would be preferable to a state-level levy. Xavier Becerra, the Democratic candidate for governor, likewise came out against the proposal. A leading teachers union also opposed the measure, in part because only a small share of the resulting revenue would have been directed to schools.
Financial opposition to the initiative was substantial. Google co-founder Sergey Brin helped lead a wave of campaign spending by wealthy Californians against the measure, and at least five times as much money was spent opposing Proposition 40 as was spent in its favor. Brin also backed a separate campaign that placed two additional proposals on the ballot, which were designed to prevent the billionaire tax from taking effect had voters approved it.
The rejection of Proposition 40 leaves California without the healthcare funding its supporters had envisioned and underscores the difficulty of advancing wealth-tax proposals even in a state with a large Democratic majority. For local readers, the result signals that debates over how to fund healthcare and schools — and over whether high earners should bear a greater share of the cost — are likely to continue at both the state and national levels.
