The backers of a proposal to levy a one-time tax on California billionaires say they have gathered enough signatures to place the measure on the ballot in November. The initiative has become one of the most politically contentious issues in the state over the past year, spurring tech moguls to spend tens of millions of dollars to oppose it.
The campaign, which is sponsored by the Service Employees International Union-United Healthcare Workers West labor union, has collected more than 1.5m signatures, according to a statement from the organization. The measure required 870,000 signatures to qualify for the ballot.
The proposed billionaires’ tax has coincided with a surge of political spending and attempts by some of California’s wealthiest residents to relocate assets to other states. While labor unions have pushed the initiative as a way to address costs of healthcare and food assistance, tech leaders and Governor Gavin Newsom have condemned the proposal and vowed to stop it from passing.
The measure would impose a one-time 5% tax on the assets of billionaires – including stocks, art, businesses, collectibles and intellectual property – to backfill federal funding cuts to health services for lower-income people that were signed by Donald Trump last year. The tax would apply retroactively to billionaires living in the state as of 1 January.
California has more billionaires than any other state – a few hundred, by some estimates. Nearly half the state’s personal income tax revenue, a financial backbone in its nearly $350bn budget, comes from the top 1% of earners.
Tech moguls, including current and former chief executives from companies such as Google, DoorDash, Reddit, LinkedIn and Facebook, have poured money into the campaign against the tax.
The Alphabet president, Sergey Brin, has donated at least $45m to the Super Pac Building a Better California, which is dedicated to blocking the tax. Alphabet’s former CEO Eric Schmidt donated more than $3m. Larry Page, who co-founded Google with Brin, meanwhile spent about $173m on two Miami mansions earlier this year and has moved a number of his limited liability companies out of California. Mark Zuckerberg, the Meta CEO, also purchased a $170m Miami property earlier this year.
The proposal has created a deep rift between Newsom and prominent members of his party’s progressive wing, including Bernie Sanders. The independent Vermont senator has endorsed the measure and touted it as a blueprint for other states.
Newsom has long opposed state-level wealth taxes, believing such levies would be disadvantageous for the world’s fourth-largest economy. The governor, who is considering a 2028 presidential run, has openly talked about his efforts to kill the proposal and said he would “do what I have to do to protect the state”.
Analysts say an exodus of billionaires could mean a loss of hundreds of millions of tax dollars.
“It’s one of the reasons why Newsom’s path to the Democratic nomination is not going to be an easy one,” Jack Pitney, a political scientist at Claremont McKenna College, said. “He’s already facing a [budget] deficit the size of which is uncertain … and in the years to come, a billionaires tax that could backfire badly.”
The measure’s lead proponent, the Service Employees International Union, sees the threat of an exodus as exaggerated.
The tax is a “workable response to a crisis created by Congress”, Suzanne Jimenez, chief of staff of SEIU-United Healthcare Workers West, said in a statement. She added that it would “keep emergency rooms open, hospitals staffed and health care systems functioning”.
The California Business Roundtable, a committee that has received massive donations from billionaires including Page and Palantir co-founder Peter Thiel, is leading the effort to defeat the measure. The organization claims the tax would “undermine our economy, decimate the state budget, drive investment out of the state and ultimately make everyday life more expensive for working families”.
