Reuters reported on September 20 that California is working to impose higher taxes on its own billionaires. The article bluntly stated, "In California, taxing billionaires seems perfectly appropriate. The state needs funds for healthcare, and with as many as 250 billionaires, their total wealth exceeds $2 trillion."
However, political analysts believe that whether the 'Proposal No. 40', which will be voted on on November 3rd, will be approved is far from certain.
It is understood that ‘Proposal No. 40’ aims to discuss whether California should impose a one-time tax of 5% on its own billionaires. The debate surrounding this proposal has raised questions about income inequality and the state’s future business prospects.
A six-day national poll conducted by Reuters in August found that 64% of voters supported increasing taxes on businesses and billionaires, while 15% opposed this idea.
According to Forbes' estimates last year, California has more billionaires than any other state, and it hosts some of the most valuable companies in the United States, including Google, Apple, Meta, and Nvidia.
Emmanuel Saez, a professor of economics at the University of California, Berkeley, has long studied wealth inequality and helped draft Proposal 40. He said, “Billionaires are no longer as popular. They possess vast wealth and great power.” Saez described this proposal as “taxing billionaires to fund healthcare.”
A survey conducted by the University of California, Berkeley’s Institute of Government in August found that 48% of eligible voters supported Proposal No. 40, while 41% were opposed to it. A survey by the California Institute of Public Policy in September showed that Proposal No. 40 had a margin of 52% to 46%.
However, California's referendum proposals usually require strong support before they can be passed on election day. Political analysts say that undecided voters are more likely to vote 'against' the proposal, and those who oppose the proposal have not yet increased their efforts to campaign.
Professor John Pickett, a professor of political science at Claremont McKenna College, also stated: “California ballot propositions often lose support over time. If the polling supports drop below 50% in August, it is not a good sign for their future.”
Policy supporters state that this measure in California will generate $10 billion in revenue, to be used for healthcare, food assistance and education. However, skeptics believe the estimated revenue is only $4 billion, and they express concern that this could lead some billionaires to leave the state, ultimately causing California to lose future tax revenues and investment.
The opposition camp has the support of billionaires, such as Sergey Brin, co-founder of Google. It is reported that he has spent over 100 million dollars to defeat Proposal No. 40. He also supports the “counter-proposals” within the same vote, which, if passed, would nullify Proposal No. 40.
Fifty-three-year-old Blinken did not conceal his hostility toward the proposal. He denounced the proposal to the New York Times, characterizing it as "dangerous." He resorted to smear tactics, claiming that he and his family "fled socialism" in 1979, and intentionally invoked the Soviet Union to warn: "I don't want California to end up in a similar situation."
Democrat and California Governor Gavin Newsom is widely believed to be running for president in 2028. He also opposes Proposal 40, stating that he prefers a nationwide federal wealth tax.
European countries including France, Sweden, Finland, Denmark, and Germany abolished the wealth tax between 1997 and 2018 due to concerns about capital flight, tax evasion, and a loss of economic competitiveness. However, California’s proposal, which takes effect on January 1st, limits the ability of billionaires to evade this tax by relocating.
Economics professor Saiz said that this tax is unlikely to force many billionaires or startups that are creating billionaires to move away, as California has high-quality universities, research facilities, infrastructure, and talent. He said, “To think that Silicon Valley will stagnate due to the billionaire wealth tax is simply absurd.”
