California voters are set to decide Proposition 40, a one-time 5% wealth tax on the net worth of the state’s billionaires. If approved, it would hit a little more than 200 people and raise $100bn for California’s health-care system.
The measure is on the ballot now because backers say the money is needed to cover federal funding cuts and protect a system already under strain. Suzanne Jimenez called it a short-term solution, saying that if nothing is done, California could see a collapse of its health-care system while leaders work on a longer-term fix.
That is why the proposal has become one of the most closely watched fights in California politics. A September poll from the Berkeley Institute of Governmental Studies and the Los Angeles Times found 45% of likely voters in favour, 42% opposed and 13% undecided, which means Proposition 40 still needs a majority to pass. With the margin still within reach but not yet there, every remaining vote matters.
The money is only part of the story. Support has come from Jensen Huang, while Sergey Brin has given more than $100m to a political organisation backing measures that could block the tax. Gavin Newsom has warned that the plan could push wealthy residents out of California and reduce income tax revenue, giving opponents a line of attack that goes beyond principle and into the state’s bottom line.
Francesco Trebbi has called it the first billionaire tax, a wealth tax aimed at a very extreme slice of the distribution, and that is what makes it different from the usual budget fight. California already has one of the highest concentrations of billionaires in the world, but it also has the nation’s largest share of homeless people and one of its widest wealth gaps. Proposition 40 is meant to answer one crisis by taxing the people most able to absorb it.
A billionaire businessman said the proposal left him feeling “a little bit like I wasn’t wanted,” and that reaction captures the split at the heart of the campaign. Supporters say the tax is a necessary bridge to keep health care afloat. Opponents say it could drive away the wealth that helps fund the state in the first place. The statewide vote will settle whether California is willing to try that wager now, or whether the wealth tax idea falls short at the ballot box.
