California Billionaire Tax Splits Democrats as Prop 40 Heads to November Ballot
The one-time 5% levy on the net worth of about 200 billionaires would raise $100 billion for health care, its union backers say, but Gov. Newsom and a growing list of Democrats are urging a no vote.
California voters next month will decide whether to tax billionaires in a way no government has tried before. Proposition 40 would impose a one-time, 5% tax on the net worth of the state's roughly 200 billionaires, and the fight over it has scrambled the usual political lines inside the Democratic Party.
The measure was put on the ballot by a petition drive led by the SEIU United Healthcare Workers West union. Its leader, Dave Regan, told CBS News' "Sunday Morning" there has never been a proposal like it anywhere in the world. He ties it to cuts in Medicaid funding in President Trump's tax-and-spending law. "What we're trying to do is restore $100 billion worth of health care cuts," Regan said, arguing that 3.5 million people will lose health insurance and that hospitals, clinics and emergency rooms will close.
If the tax passes, Regan expects the state to collect $100 billion over five years, with 90% earmarked for health care. He called it a five-year fix rather than a permanent one and said it would give California time to find a lasting solution. Asked how confident he is of winning, he answered "pretty confident."
Opposition is well funded. Google co-founder Sergey Brin is spending more than $100 million against the measure, and some billionaires, including venture capitalist Peter Thiel and Google co-founder Larry Page, have left California since the tax was proposed. Two rival measures, Propositions 41 and 42, are also on the ballot, and if either one receives more votes than Prop 40, the wealth tax is effectively nullified.
The no side also includes Democrats. Gov. Gavin Newsom calls Prop 40 "a flawed initiative," and several major unions have come out against it. Former Rep. Katie Porter, a progressive, said she has long fought to make the ultra-wealthy pay more but that this tax does not do it correctly. "You don't get a second bite at tax policy," she said, warning that once someone leaves California the state can no longer tax them.
Supporters point to a real gap in the tax code. Billionaires pay income, property and capital gains taxes, but most of their wealth sits in stocks that are not taxed until sold. Boston College law professor Ray Madoff said the richest Americans have been "written out of the tax system" and called the system "deeply broken." She said Prop 40 cannot fix that alone, but that it could have symbolic value if it pushes for change at the federal level.
Polls are tightening, with voters now more divided. A yes voter told CBS it is "bigger than Prop 40" and a fight back against the Trump administration, while a no voter said the worry is people leaving the state. Nvidia CEO Jensen Huang, whose net worth Forbes puts at about $200 billion, was the only billionaire willing to talk. He said he does not mind paying taxes but does not like tax dollars wasted.
