When California voters go to the polls next month, they will be asked whether they should pass a new proposal calling for taxing billionaires like never before. Jo Ling Kent explains what Proposition 40 is:
“There’s never been a proposal like this anywhere in the world, so it’s a novel idea,” said health workers’ union leader Dave Regan. “We are facing an emergency.”
An emergency that began, according to Regan, with President Trump’s so-called “One Big Beautiful Bill,” which includes targeted cuts to federal funds for Medicaid over the next few years.
“What we’re trying to do is restore $100 billion in cuts to health care,” Regan said. “Three and a half million people are losing their health insurance. Hospitals, clinics and emergency rooms will close.” They could also cost jobs in Regan’s own union, the SEIU United Healthcare Workers West.
So to bridge the gap, Regan and the union launched a petition to place on the November ballot a one-time 5 percent state tax on the net worth of California’s roughly 200 billionaires, known as Proposition 40.
How confident is Regan that this will pass? “Pretty confident,” he replied.
Regan’s tactics are controversial. His behavior? Under surveillance. But if the wealth tax passes, he expects the state to raise $100 billion over five years, 90 percent of which will be specifically for health care.
“We’re not trying to pretend this is a permanent solution,” Regan said, “but a five-year solution is better than no solution. And it gives the state of California an opportunity to determine what the right solution is.” permanent solution.”
Asked if a five-year tax was a solution, Regan said, “Absolutely. Ask the three and a half million people who will lose their health coverage. »
Competing proposals
Since the wealth tax was proposed, some billionaires have left California, including venture capitalist Peter Thiel and Google co-founders Larry Page and Sergey Brin. Brin is spending more than $100 million to oppose the measure.
And California being California, there are two other opposition-backed propositions on the ballot, Propositions 41 and 42. If either receives more votes than Proposition 40, it effectively cancels the wealth tax.
And the billionaires have strange bedfellows: Several other major unions and Democrats agree with them on voting no, including California Governor Gavin Newsom (who calls Proposition 40 a “flawed initiative”) and former Democratic Rep. Katie Porter.
“Generally speaking, as a progressive, I’ve fought to make sure the ultra-wealthy pay more,” Porter said. “But this tax is not doing that properly, causing these people to leave and leave. We want billionaires to create jobs here, create businesses here. …
“You don’t get a second chance when it comes to tax policy,” she continued. “A tax you pass has lasting consequences. When someone leaves California, we can’t impose it anymore. It’s an ongoing problem. It’s much harder to reclaim the tax base than it is to increase it in the first place.”
This is where taxes get complicated: billionaires can pay high taxes on income, property and capital gains. But most of their wealth is usually in stocks, which are not taxed until sold.
“It’s a system in which the wealthiest Americans have been excluded from the tax system, much like the aristocracy of pre-Revolutionary France,” said Ray Madoff, a professor at Boston College Law. “People who have enough money to legally live off their investments and inheritances do not have to pay taxes.”
Madoff says Prop 40 highlights a “deeply broken” tax system and believes it can be beneficial. “My feeling about Prop 40 is that meaningful change needs to happen at the federal level,” she said. “And I think to the extent that Prop 40 creates an incentive for meaningful change to take effect at the federal level, then I would say it would be helpful. By itself, it obviously can’t do anything; it’s just filling a temporary hole, right? But I think Prop 40 has some symbolic value.”
“California is America’s next attraction”
As for the outcome of this development, the polls are tightening, with voters now more divided. One “yes” voter told us, “To me, this is bigger than Proposition 40. It’s a fightback against the Trump administration. »
One “no” voter said, “We’re really concerned about people leaving the state. »
No billionaire contacted by “Sunday Morning” wanted to talk to us about Prop 40… except one. “I don’t mind paying taxes; the more you earn, the more taxes you pay, so I’m fine with that,” said Jensen Huang, founder and CEO of U.S. chipmaker Nvidia, headquartered in Silicon Valley. “I don’t like wasting taxpayer money. But I also support everything this country stands for.”
Huang’s first job was as a dishwasher at Denny’s. Today, Forbes estimates his net worth at around $200 billion, making him the seventh richest person in the world.
“I’m the ultimate American dream,” Huang said. “Without this country, the education, the ability to start a new business, to follow your dreams, I wouldn’t have met all the people who made Nvidia possible. I love this country in every way possible. And it’s not perfect, but it’s amazing.”
Even if you end up paying maybe $8 billion over five years? “The fact that I can afford to pay $8 billion in taxes over five years is a privilege,” Huang responded. “I’m not afraid of paying taxes. I’m just afraid of being poor.”
Whether you’re poor or rich, for or against the billionaires tax, its architect, Dave Regan, is already looking beyond November — and beyond California. “Other states around the country are going to start looking to follow California’s lead, as has happened many times in the past,” he said. “California is America’s next big thing, and it’s coming to a state near you after it passes on November 3.”
Story produced by Dustin Stephens. Publisher: Emanuele Secci.
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