California says no to the 5 per cent tax on billionaires
The Democratic Party, which held a majority in the State, was divided over the proposal
California has rejected, via a referendum, a proposal for a tax on billionaires’ wealth – backed, amongst others, by the economist Gabriel Zucman – according to US media reports, almost a week after the vote. According to CNN and CBS News, ‘Prop 40’ failed to secure a majority of the vote. The measure provided for a one-off levy of 5 per cent on the net worth of the approximately 200 billionaires residing in the state – the most populous in the United States – in order to help fund the public healthcare system.
Democratic voters, who make up the majority of the Californian electorate, usually support the idea of raising taxes on the wealthiest. However, Democratic leaders were divided over the proposal: Governor Gavin Newsom opposed it, whilst the California Democratic Party backed it. Furthermore, some of the Californian billionaires who would have been liable for the tax contributed significantly to a campaign that attacked the proposal with television adverts throughout October.
Proposition 40 also suffered from the weakness of its coalition of supporters, which was unable to compete with the impact of those adverts and relied on less expensive methods, such as social media and influencer campaigns, to win support.
The result of the vote was not announced until almost a week after the election, as the counting of postal votes in California proceeded at a very leisurely pace. Although the gap in the vote narrowed as the ballots were counted, the proposal ultimately failed to secure sufficient support, despite it having been a highly successful election for the Democrats and for progressive candidates.
On Monday evening, Proposition 40 was polling at just 47 per cent, with an estimated 83 per cent of votes counted. The failure of the ‘billionaires’ tax’ in California – a progressive-leaning state – is likely to be cited for many years to come as proof that Americans are unwilling to accept such wealth taxes. The issue is likely to return to the forefront of the debate during the 2028 presidential campaign; Newsom has already stated that he supports a national wealth tax, but not a measure limited solely to the State of California.
