California Billionaires Spend Millions to Block Proposed Wealth Tax

California voters will decide on three conflicting tax measures in the November election. Proposition 40 proposes a one-time 5% wealth tax on residents with extreme net worth, which supporters estimate could raise at least $107 billion, with 90% earmarked for Medi-Cal healthcare services. However, researchers at the Hoover Institution estimate revenue would be lower, around $40 billion, due to potential residency shifts.

To block the wealth tax, Sergey Brin and other billionaires, including Peter Thiel and Eric Schmidt, have contributed $293 million to oppose Proposition 40. Brin specifically donated over $138 million to support Propositions 41 and 42, which are designed to invalidate the wealth tax. Proposition 41 would mandate audits for new tax programs, while Proposition 42 would prohibit new state personal property taxes and certain retroactive taxes. Because the initiative with the most votes takes effect, either measure could block Proposition 40 even if it passes.

Governor Gavin Newsom has endorsed Proposition 42 and opposes the state-level wealth tax, advocating instead for a national wealth tax. This position diverges from the California Democratic Party and Senator Bernie Sanders. In response to the potential tax, Meta created nonvoting Class C common stock to allow its CEO to sell shares and pay taxes while maintaining voting power and remaining in California for eight years. The ACLU of Southern California argues that Propositions 41 and 42 are deceptive attempts by billionaires to undermine community investments in housing and health care.