Why Californians Want a Billionaire Tax (but May Not Get One)

Friends,

After living in the Golden State for over two decades, I understand the old saw that America is built on a tilt, and everything good or bad slides down from California. (Mark Twain said everything loose slides to California.)

Among the good is California voters’ support for what could be America’s (indeed, the world’s) first tax on billionaires — which will appear as Proposition 40 on California’s upcoming ballot. (Note to Californians: Propositions 41 and 42 are poison pills designed to negate Proposition 40.)

A majority of Californians are in favor of Proposition 40 (65 percent of the state’s Democrats back it).

On the bad side are the hundreds of millions of dollars spent by California’s billionaires against the proposal (including $187 million from just one of them, Google co-founder Sergey Brin) — along with the cowardice of most of the state’s political class in either saying nothing about the billionaire tax proposal or falling in line behind Governor Gavin Newsom in opposing it.

I’ve studied the proposal, and, while not perfect, I judge it a significant step in the right direction. It would be a one-time 5 percent tax on the assets of California’s billionaires, designed to reimburse the state for the healthcare money lost to it when Trump’s Big Ugly Bill cut Medicaid to help pay for a gigantic tax cut that went mainly to the richest Americans and biggest corporations.

The billionaire tax is fair. It won’t cause billionaires to abandon California (only a handful have left and, as I said, it’s a one-time tax that pertains only to wealth as of January 1, 2026). It’s carefully crafted. It was largely the brainchild of two of my brightest colleagues here at Berkeley, economists Emmanuel Saez and Gabriel Zucman. It’s been endorsed by six Nobel laureates.

So, why are so many of California’s politicians — all of them Democrats, including Newsom — opposed? Could it have anything to do with their dependence on campaign funding from the super-wealthy? I’m not entirely sure, but that possibility has occurred to me — which in itself is a good reason to support the measure.

Meanwhile, the piles of money put into TV ads against the measure — coming from billionaires, of course — combined with the political opposition from Newsom on down is beginning to to take a toll. Although a majority of Californians are still in favor, the margin is slipping.

I should hasten to add that one California politician strongly supporting the proposed billionaire tax is Ro Khanna. He represents Silicon Valley in Congress, which makes his support of it both politically risky and an admirable profile in political courage.

Ro Khanna is interested in becoming the Democrats’ candidate for president in 2028 — as, of course, is Gavin Newsom. Progressives around America should take note.

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