Billionaires raise $300 million to stop California tax

California tech billionaires have raised more than $300 million to block a one-time 5 percent tax on the assets of the state's wealthiest residents. Supporters of the measure raised only $32 million in comparison. The disparity makes this the most expensive ballot measure in California history, according to David McCuan, a political science professor at Sonoma State University who tracks state elections.

The tax, known as Proposition 40, would apply only to individuals with net worth exceeding one billion dollars. Voters will decide on the proposal during the midterm election on November 3. Brian Galle, an economics professor at the University of California at Berkeley and coauthor of the tax proposal, noted that opponents have distributed flyers containing inaccuracies. He found a flyer in his mailbox claiming the tax could apply to anyone, including those with retirement savings.

Notable donors to the opposition include Google co-founder Sergey Brin, Doordash founder Tony Xu, Stripe co-founder Patrick Collison, Ripple co-executive chairman Chris Larsen, and venture capitalists John Doerr, Michael Moritz, and Vinod Khosla. Meta founder Mark Zuckerberg did not donate directly to the campaign. However, Meta's SEC filings showed he told the company's board, which includes Xu and Collison, that he would purchase a home outside California to avoid the tax. The board subsequently created a new class of shares that Zuckerberg could use to pay the tax.

The spending gap has fueled a massive advertising campaign. Ashley Craig, a volunteer for the group Patriotic Millionaires, said she often hears misinformation from voters. She described the environment as an Alice in Wonderland alternate reality. Craig said voters frequently tell her the tax has secret provisions that would eventually tax them, which she says is not entirely true. Any change to the tax structure would require a two-thirds majority in the state assembly.

Francesco Trebbi, a business and public policy professor at UC Berkeley's Haas School of Business, said the situation reflects the impact of the Supreme Court's Citizens United decision. He stated that this legal framework gives individuals like Sergey Brin a disproportionate political voice compared to the general population. Galle noted that the proposal aims to make democracy more equal, but the billionaires are using their wealth to avoid that outcome.

The Democratic Party has endorsed the tax, but internal disagreements have limited ground support. McCuan described the fight as a proxy test between the party's progressives and moderates. If the measure passes, progressive candidates might pursue similar ideas in the 2028 presidential election. California Governor Gavin Newsom, who is considering a 2028 run, has opposed the tax. He called it poorly written and warned it could harm the state if billionaires leave. Newsom cited an estimated combined wealth of $2.3 trillion for California's billionaires.

Opponents also backed two other ballot measures. One would prohibit new state taxes based on personal property or retroactive taxes. The other would require state auditors to review the financial impact of proposed tax measures before voters decide. If these measures pass and receive more votes than the billionaire tax, they could negate Proposition 40 even if it passes.

A recent poll by the Public Policy Institute of California showed voters supporting the tax by a small margin. Mark Baldassare, the survey director at the institute, said only about a third of citizen initiatives pass. He noted that support can decline if voters are not confident in the measure. Suzane Jiminez, chief of staff at the SEIU health workers union, which sponsored the measure, said she feels confident the group will secure the votes. She said voters often see through the billionaire-funded ads.

Senator Bernie Sanders and Congressman Ro Khanna have campaigned across the state in support of the measure. Jiminez said 3,000 volunteers have been knocking on doors and distributing explanatory flyers in recent weeks. She stated that Democratic figureheads do not represent the rank and file on this issue. Baldassare plans to conduct another poll as voters read the state's voter guides and finalize their decisions. McCuan argued that the historic spending against the measure is a win for backers because it demonstrates the intensity of opposition from big tech.

The outcome of the November 3 vote will determine whether California implements the one-time asset tax. The opposing measures also appear on the ballot. The spending by the billionaire opposition has turned the election into a major test of wealth inequality in the state.