California Billionaires' Tax Faces Fierce Opposition From Unlikely Allies

A proposed one-time 5% surtax on the wealth of California billionaires, slated for the state's ballot next month as Proposition 40, is encountering strong opposition from an unusual coalition of political figures and industry leaders. Democratic Governor Gavin Newsom is aligning with Republicans, Hollywood figures, and Silicon Valley executives in an effort to defeat the measure.

If passed, Proposition 40, scheduled for the Nov. 3 ballot, would levy a tax on the wealth of the state's billionaires, with the revenue primarily allocated to healthcare. Payments would begin in 2027 and could be made over up to five annual installments. The initiative has garnered support from progressive figures, including Democratic Socialist Sen. Bernie Sanders (I-Vt.) and Rep. Ro Khanna (D-Calif.), who represents Silicon Valley. Advisors to Sen. Elizabeth Warren (D-Mass.) have also backed the proposal, and Saikat Chakrabarti, a former chief of staff to Rep. Alexandria Ocasio-Cortez (D-NY), has provided significant financial backing.

"It's a blueprint for direct democracy in the states to retake their power and address some of the actions by Congress," said Robert Dempsey, political director for Our Revolution, a group supporting the initiative, citing concerns over potential Medicaid cuts.

Recent polling indicates a divided electorate. A Mason-Dixon poll conducted last month showed Proposition 40 leading with 48% support versus 39% opposed, with 14% undecided. However, the measure has faced a barrage of criticism. Governor Newsom has argued that a wealth tax could negatively impact California's economic standing, suggesting that some billionaires might consider relocating. He has expressed a preference for a national approach to taxing billionaire wealth and believes that state legislative bodies, rather than ballot initiatives, should determine spending priorities.

Democratic gubernatorial candidate Xavier Becerra has described the proposition as "sketchy," while Republican candidate Steven Hilton has called it an "insider swamp game" that threatens the economy. A Manhattan Institute poll released earlier this month indicated that opposition to the measure was leading by a margin of 50% to 35%.

Multiple bills aimed at taxing wealthy individuals are currently under consideration in Congress, including proposals from Sanders and Khanna that bear similarities to Proposition 40, as well as a measure from Sen. Warren and Rep. Pramila Jayapal (D-WA) targeting "ultra-millionaires." Additional initiatives are anticipated as new lawmakers join the House.

Organizations such as Planned Parenthood and the California Teachers Association union have also voiced opposition, as Proposition 40 directs its estimated $100 billion revenue haul toward healthcare rather than education. Billionaire Google cofounder Sergey Brin has reportedly spent over $100 million on advertising campaigns against the proposal.

Pollster Brad Coker of Mason Dixon noted that 19% of Republicans supported Proposition 40 in his firm's poll, a finding he found difficult to explain. He speculated that the public opposition from prominent figures might be influencing some voters, potentially leading to a counter-reaction.

Coker also cautioned that undecided voters often break against ballot initiatives late in a campaign, which could present a challenge for Proposition 40's success.