It appears California billionaires poured huge sums of money to block a ballot measure that would tax their wealth.
Google co-founder Brin Sergei /Courtesy of AP
On the 2nd (local time), according to the Washington Post (WP), the coalition Building a Better California, which is backed by funding from billionaires including Google co-founder Sergey Brin and former Google Chief Executive Officer (CEO) Eric Schmidt, spent more than $148 million (198.3 billion won) to defeat Proposition 40.
The funds raised by the opposition camp to block the “Billionaire Tax Act” topped $379 million (about 510 billion won). Although it is not uncommon in California for more than $100 million to be poured into a ballot campaign, this ballot is expected to be recorded as one of the most expensive election battles in the state’s history.
According to WP’s analysis, the opposition camp’s advertising expenditure outpaced the supporting camp’s by 250 times. An analysis by the outlet of data from the California Secretary of State’s Office and the Forbes billionaires list found that at least 29 billionaires were moving in an organized way to block the introduction of a wealth tax. They are directly opposing Proposition 40 while also funding two other ballot initiatives that could neutralize the wealth tax.
In particular, Brin, Google’s co-founder, donated $102 million (about 140 billion won) to the anti-wealth tax campaign. David McCuan, a political science professor at Sonoma State University who has studied ballot initiatives for 20 years, said, “This ballot will be the most expensive ballot in world history,” adding, “Sergey Brin alone put up $102 million.”
Proposition 40, known as the “billionaire tax,” would impose a 5% tax on assets held by California billionaires. The tax base includes investment assets such as stocks and corporate ownership equity. Ninety percent of the tax revenue secured would be funneled into Medi-Cal, California’s program of the federal low-income health insurance program Medicaid.
As of Jan. 1 this year, there are about 240 billionaires residing in California, and their combined assets are estimated to reach $2.05 trillion (about 270 billion won). This is more than any other state in the United States and, globally, exceeds the total wealth of entire countries except for a few. The wealth tax applies to those residing in California as of Jan. 1 this year with assets exceeding $1 billion.
The opposition camp argues that the wealth tax will spur billionaires to move to other states, causing massive tax revenue losses. According to an analysis by Stanford University economist Joshua D. Rauh, California’s annual income tax receipts could fall by as much as $5.8 billion due to billionaires’ departures.
In fact, Brin, one of California’s representative tycoons, changed his voter registration from California to Nevada in December last year. Larry Page, who founded Google with Brin, also left California and moved his residence to Florida between December last year and January this year. Mark Zuckerberg, the CEO of Meta, was also reported to be considering relocation, including purchasing a mansion worth about $170 million in Miami, Florida, in March.
As opposition ads backed by billionaires poured in, support for the wealth tax also fell. In a recent poll jointly conducted by the Los Angeles Times (LA Times) and the Institute of Governmental Studies (IGS) at the University of California, Berkeley, 50% of likely voters said they oppose the measure. Support was 42%.
Prominent Democratic politicians also joined the opposition. Gavin Newsom, the Democratic governor of California, and Javier Becerra, a candidate in the next gubernatorial election, also expressed opposition. They argued that introducing a wealth tax would spur billionaires to move to other states and hurt California’s economy.
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