Few places on the planet have as many ultra-wealthy residents as California, a US state known for glamour, coastal mega-mansions, and being home to many rich and famous. Now, voters are about to decide if the mega-rich among them—names that include media mogul Oprah Winfrey, Meta head Mark Zuckerberg, Skims cofounder and reality television star Kim Kardashian, and filmmaker George Lucas—should hand over billions of dollars to pay for improvements to healthcare.
Proposition 40
Proposition 40 is aimed at levying a one-time 5% tax on the net worth of all of California's billionaires. There are a little more than 200 such individuals in the state, but that hasn't stopped the measure from dividing leaders and causing some of its ultra-wealthy residents to flee. One billionaire businessman stated that he has brought jobs to California, but the proposition made him feel "a little bit like I wasn't wanted".
A Voice for Residents
The vote is also offering regular everyday residents a voice on an issue that has riled politics for decades. "I believe this is the first billionaire tax—meaning a wealth tax that is targeting a very extreme percentile of the wealth distribution," says Francesco Trebbi, a public policy professor at the University of California, Berkeley. He noted the measure's historic nature and how it could help even out California's wealth gap.
California has the largest economy in the country and boasts the fourth largest global economy, bigger than India and the whole of the UK. However, it also has the largest share of homeless people in the nation and one of the highest wealth gaps.
Those who back the measure argue it helps ensure that the ultra-wealthy are contributing their fair share and will help backfill gaps in the state's budget. The move aims to raise $100 billion (£75 billion) to make up for federal funding cuts to the state's healthcare system. Suzanne Jimenez, chief of staff for Service Employees International Union-United Healthcare Workers West, which helped lead the charge for the initiative, says the measure is a "short-term solution" for massive federal funding cuts coming to California as a result of President Donald Trump's sweeping tax and spending bill. "If we do nothing, we're going to see a collapse of our healthcare system, while we figure out a longer-term solution to fund our healthcare," she told the BBC.
Opposition and Support
While the ballot measure has many supporters—including some billionaires like Nvidia CEO Jensen Huang—it has faced fierce opposition from a variety of figures, including billionaires and the state's liberal governor. Google co-founder Sergey Brin has given more than $100 million to a political nonprofit funding ballot measures that could block the wealth tax, according to the Los Angeles Times.
California Governor Gavin Newsom, whose tenure is coming to an end, is perhaps the most notable political leader opposing it. He has voiced concerns that the measure could cause the wealthy to leave the state and drive out their crucial income tax revenue. A September poll from the Berkeley Institute of Governmental Studies and the Los Angeles Times found that the proposition has not clearly won over a majority of voters, with 45% of likely voters in favor of the tax, 42% opposed, and 13% undecided.
