California's proposed billionaire tax, Proposition 40, was trailing in early election results Tuesday night, signaling a likely defeat after a contentious campaign that divided Democrats and saw Silicon Valley’s wealthiest spend heavily against the measure. The proposition, which aimed to implement a one-time 5% tax on the net worth of billionaires, was behind 56% to 44% as about half of the ballots were counted.
The measure became one of the most fiercely debated on the state ballot, drawing support from labor unions and progressive Democrats while facing opposition from some of the world’s richest tech entrepreneurs. Google co-founder Sergey Brin was among the most prominent opponents, contributing over $100 million to efforts aimed at defeating the tax. Brin invoked his family's history of fleeing communism, stating, "I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don’t want California to end up in the same place."
To counter Proposition 40, campaigns supporting alternative measures, Propositions 41 and 42, were also funded by wealthy opponents. Proposition 41 sought to tighten rules on certain new state taxes, while Proposition 42 aimed to prohibit new state taxes on personal property, including financial assets. Either of these measures could nullify Proposition 40 if they received more votes. As of early returns, Proposition 42 was leading, while Proposition 41 was narrowly trailing.
The tax battle exposed divisions within California's Democratic Party. Governor Gavin Newsom and gubernatorial candidate Xavier Becerra opposed Proposition 40, expressing concerns that it could drive businesses and jobs out of the state. However, the California Democratic Party endorsed the measure at its convention in August, defying its leaders. Senator Bernie Sanders of Vermont also campaigned in California in support of the tax.
Supporters of Proposition 40 claimed it could generate $100 billion, with the majority allocated to healthcare and the remainder to education and food assistance. However, California's Legislative Analyst's Office projected that the tax would generate tens of billions of dollars over several years, a more conservative estimate than the campaign's projection. The measure was spearheaded by Dave Regan, president of SEIU United Healthcare Workers West, who faced allegations of pressuring fellow labor leaders and intimidating union officials.
Amid the intense debate, several prominent tech billionaires, including Markus “Notch” Persson, Peter Thiel, and Travis Kalanick, reportedly explored options to relocate from California. Meta founder Mark Zuckerberg was also reported to have considered establishing residency outside the state. The high-stakes contest positioned California as a national testing ground for a wealth tax, a policy advocated by progressives across the United States.