Billionaire Tax: $300m Campaign Battles Proposal in California

California voters will decide on a one-time 5 percent tax on billionaire assets in a November 3 election that has become the most expensive ballot measure in state history.

The proposal, known as Proposition 40, targets individuals with assets exceeding $1 billion. Brian Galle, an economics professor at the University of California, Berkeley, co-authored the tax. Galle recently received a flyer in his mailbox containing details he did not write, such as claims that the tax could apply to retirement savings or any individual.

David McCuan, a political science professor at Sonoma State University who tracks state elections, notes that the spending by opponents has made this the costliest ballot campaign in the state. More than $300 million has been raised to block the tax. Donors 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.

Supporters of the tax have raised only $32 million. This funding gap has fueled a widespread advertising campaign. Ashley Craig, a volunteer for the group Patriotic Millionaires, reports that voters frequently cite misinformation about the measure. Craig often hears that the tax includes secret provisions allowing anyone to be taxed. She states that while the tax can be modified, any changes require a two-thirds majority in the assembly and must preserve the measure's intent.

Mark Zuckerberg, the founder of Meta, has not donated to the opposition. However, Meta's SEC filings show that he told the company's board he would buy a home outside California to avoid the tax. The board, which includes Xu and Collison, created a new class of shares that Zuckerberg could use to pay the tax. This move could have influenced Meta's stock price.

The campaign has exposed divisions within the California Democratic Party. The state party endorsed Proposition 40, but Governor Gavin Newsom opposes it. Newsom, who is considering a run for president in 2028, called the tax poorly written. He argued it could harm the state if its billionaires, who hold an estimated $2.3 trillion in wealth according to the measure's authors, relocate. Democratic gubernatorial candidate Xavier Becerra and former congresswoman Katie Porter also oppose the proposal.

Francesco Trebbi, a professor at the UC Berkeley Haas School of Business, described the situation as Sergey Brin having a louder political voice than millions of Californians. He cited the US Supreme Court's Citizens United v FEC decision, which allows companies and special groups to spend freely in elections. Trebbi said this dynamic leads people to lose trust in the system.

Opponents are also backing two other ballot measures. One prohibits new state taxes based on personal property or retroactive imposition. The other requires state auditors to review financial impacts of proposed taxes before voting. If these measures pass and receive more votes than the billionaire tax, they could negate it even if Proposition 40 passes.

A recent poll by the Public Policy Institute of California shows voters support the tax by a small margin. They also support the two opposing measures. Mark Baldassare, the statewide survey director at the institute, noted that only about a third of citizen initiatives pass. He said support can decline if voters are uncertain. Suzane Jiminez, chief of staff at the SEIU health workers union, which sponsored the measure, expressed confidence in their chances. She said voters see through the ads when they know billionaires are funding them.

Senator Bernie Sanders of Vermont and Congressman Ro Khanna of California have traveled the state to rally support. Jiminez reported that 3,000 volunteers have knocked on doors and distributed flyers in recent weeks. McCuan suggested that the historic spending by opponents is a win for backers. He said progressives can use the result to argue that moderates sank the measure and can attack big tech as a political bogeyman.