California rejects proposal to tax the wealth of state’s billionaires

Proposition 40, which sought to tax part of the fortunes of California’s wealthiest residents and direct those resources to health and education programs, was rejected by voters. The measure had sought for residents with a net worth of over a billion dollars to pay a one-time tax equivalent to 5% of their fortunes to offset federal healthcare funding cuts.Surveys showed voters divided over the measure. Its proponents blamed the lack of consensus on an aggressive ad campaign financed by large donations from some of the richest members of Silicon Valley, as well as a lack of support from the Democratic Party establishment. “The billionaires may have bought themselves a temporary victory at the ballot box, but they have not bought themselves an end to this debate, and this is only round one”, declared the union behind the measure, SEIU-UHW, in a statement.High-profile Democratic figures had spoken against the measure, including governor-elect Xavier Becerra and the outgoing governor Gavin Newsom. Both said they preferred a federal tax to prevent billionaires from moving to a different state. The organization Building a Better California, financed by tech industry billionaires opposed to the tax, celebrated the result of the vote on a measure they said was “a reckless experiment conducted on our state’s economy with little regard for the harms it would cause.” In California, the 200 ultra-wealthy individuals who would have been subject to the tax have an accumulated worth estimated at $2.3 trillion, roughly equivalent to the gross domestic product of the entire state, home to 39 million people. Their mansions are located in Beverly Hills, Los Angeles, Newport Beach and Silicon Valley. They represent 0.001% of the population and, between 2023 and 2025, the wealth of some grew 144% on the surge of the AI industry, according to a study by the National Bureau of Economic Research.Six winners of the Nobel Prize in Economics — Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman and Joseph Stiglitz— have stated that the model should be extended to the rest of the planet.Sign up for our weekly newsletter to get more English-language news coverage from EL PAÍS USA Edition