California voters rejected controversial billionaires tax.
Proposition 40 sought to impose a one-time 5% tax on the assets of California billionaires to try to offset cuts in federal health care funding.
Despite the blue wave of the midterm elections, the new tax on the ultra-rich was late from the first day of vote counting and was officially rejected on Monday.
About 53% of Californians voted against the measure, while 47% supported it, the Associated Press said in declaring the proposal failed.
Although the billionaires tax was rejected in the vast majority of counties, the latest tally showed significant pockets of support in Los Angeles and San Francisco, home to the lion’s share of the state’s 200 billionaires. Orange County, however, voted no by a large majority.
The political battle over the ballot measure and two competing proposals has divided the state and been among the costliest in California history. More than $400 million was spent on the three closely related ballot measures, more than 90% of it to oppose the billionaires tax, according to fundraising information filed with the secretary of state’s office.
Billionaires, including Google co-founder Sergey Brin, have invested hundreds of millions of dollars in groups that funded ads to eliminate the billionaires tax. California Governor Gavin Newsom, the California Teachers Assn. and Planned Parenthood Affiliates of California are among powerful Democrats and other Democratic-aligned groups that have expressed fears that billionaires are fleeing the state. Some, including Brin and fellow Google co-founder Larry Page, left California because of the proposal.
A wave of ads against the billionaire tax argued that it could impact all Californians, not just the ultra-wealthy. Teachers, firefighters and other middle-class Californians have become the faces of their campaigns, fueling growing opposition as Election Day approaches.
Opponents of Proposition 40 said Californians made the “right decision,” calling Proposition 40 a “reckless experiment” that would harm the state’s economy. The group included the California Medical Assn., California Primary Care Assn. and the California School Boards Assn.
“Proposition 40 endangers California’s economic competitiveness and fiscal stability, as well as the revenues we rely on to fund our top priorities – from education and health care to public safety and infrastructure,” the group said.
Leaders of the Service Employees International Union-United Healthcare Workers West, which sponsored the proposal, have pledged to put a billion-dollar tax proposal on the 2028 ballot if Sacramento leaders don’t find a way to better support the public health sector. Given the volatility of California’s budget, which is expected to be particularly problematic next year, it seems unlikely that state lawmakers will find a way to make up for the estimated $100 billion in cuts to federal health care funding.
Supporters said the proposed tax on more than 200 California billionaires aims to increase that amount, with 90% funding health care and the rest going to schools and food assistance.
“Propaganda funded by billionaires may have influenced the outcome of this election, but as hospitals cut services, emergency rooms close, and families lose access to care, the truth will become increasingly difficult to hide,” said SEIU-UHW Chief of Staff Suzanne Jimenez. “Californians will see for themselves what was at stake.”
This will not end the debate over taxing the rich. U.S. Sen. Bernie Sanders (I-Vt.) and Rep. Ro Khanna (D-Fremont), who both supported Proposition 40, are pushing for passage of a 5 percent federal tax on America’s billionaires.
Earlier this year, they introduced the Making Billionaires Pay Their Fair Share Act. Although Democrats took control of the House and Senate last week, the legislation will likely face constitutional challenges if it passes.
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