healthcare

Despite a nationwide blue wave in the midterm election, California’s much-debated billionaire tax didn’t get the support many expected in one of the country’s most liberal states.

Since the Golden State’s powerful healthcare union proposed the new tax, supporters of Proposition 40 have faced a fierce, expensive battle against the world’s richest people.

In what has been described as a David-versus-Goliath fight, the underdog appears to have lost. The proposition, which would have imposed a one-time 5% tax on the assets of California billionaires to mostly fund healthcare, seemed headed toward defeat as votes were tallied Wednesday.

“In a deep blue state like California, most voters are going to support additional funding for healthcare, especially to replace Trump funding cuts. But in retrospect, the sponsors may wish they’ve been a little bit less ambitious,” said Dan Schnur, a politics and communications professor at USC, UC Berkeley and Pepperdine.

Nearly 56% of California voters rejected the proposal while 44% voted for Proposition 40. However, with roughly 6 million votes still needed to be counted, the results are still too close to call.

The battle over the billionaire tax has been one of the most expensive ballot-measure fights in California’s history, sparking a debate over wealth inequality and taxing the ultrawealthy. It also highlighted how billionaires have wielded more influence in politics.

Well-known politicians such as U.S. Sen. Bernie Sanders (I-Vt.), the California Democratic Party, healthcare workers and Hollywood celebrities including actor Mark Ruffalo, backed the wealth tax. But the idea drew opposition from California Gov. Gavin Newsom, the teachers union, Planned Parenthood, business groups and others who expressed fears that billionaires could flee the state.

The state’s next governor, Xavier Becerra, who just won, also opposed the tax.

Though California’s $4.25-trillion economy remains a global powerhouse, and a major draw for investments in AI and aerospace, thousands of businesses have moved to Texas and other states in recent years due to lower costs.

Opponents of the wealth tax heavily outspent Proposition 40 supporters, flooding televisions, radio, social media and smartphones with ads. Their message: the wealth tax is a reckless experiment and a tax on everyone, not just billionaires.

UC Berkeley law professor Brian Galle, who helped write the wealth tax proposal, said it’s tough to “fix a broken system” and get the facts to people when they were up against the ultrawealthy. Billionaires also own media outlets and social media companies, megaphones that help spread political messaging.

“When billionaires have half a dozen different strategies for buying this election, it shows that they already have too much money and pay too little back,” he said.

Support for the billionaire-bashing proposition had already begun to wane in recent months.

A poll by UC Berkeley’s Institute of Governmental Studies, co-sponsored by the Los Angeles Times and released last week, showed that voter support for Proposition 40 had fallen to 42% of voters surveyed last month from 48% in August.

The measure also may have lost fans because taxing assets rather than income can be a complicated and confusing process and sparks concerns among even non-billionaires on whether they want to allow the state to start demanding a slice of the value of the things that they own.

No matter the result, Proposition 40 also fueled a conversation about taxing billionaires that will continue, Galle said.

As of Wednesday afternoon, roughly $489 million has been raised to support and oppose Proposition 40 along with two ballot measures — Propositions 41 and 42 — that could block the wealth tax, data from the California secretary of state show.

The vast majority of that funding, more than $380 million, went toward killing the billionaire tax. Supporters of the wealth tax, including the Service Employees International Union-United Healthcare Workers West, trailed far behind, contributing roughly $100 million, according to filings with the California secretary of state.

Billionaires such as Google co-founder Sergey Brin contributed millions to a group called Building a Better California that funded ads against the wealth tax and propositions that could block it.

Money doesn’t always win an election, but a big funding imbalance is tough to overcome, Schnur said.

“As important as the money was to beat Prop. 40, the coalition against it may have been just as important. You didn’t see Sergey. You didn’t see tech billionaires in the ads. You saw teachers and nurses and firefighters,” he said.

The four richest Californians — Brin, Nvidia Chief Executive Jensen Huang; Google co-founder Larry Page and Meta Chief Executive Mark Zuckerberg — would owe 40% of the estimated taxes to be collected from the billionaire tax, according to an L.A. Times analysis.

Ahead of the election, billionaires made moves to prepare for the potential tax. Zuckerberg expressed concerns that if he had to sell his stock to pay the tax that could reduce his control over the company, but Meta’s board struck a deal to address that fear.

The billionaire tax proposal also faced other big hurdles. Proposition 42, which could have blocked the billionaire tax, was on track to pass. It would prohibit new taxes on “retirement holdings, individually-owned assets, and other forms of personal savings” and bar retroactive taxes.

“They didn’t just reject a single bad tax idea — millions of Californians backed the strongest protections available to protect their hard earned life savings from double taxation. They joined firefighters, law enforcement officers, building trades workers, seniors, veterans and small businesses in doing so,” said Nathan Click, a spokesman for Proposition 42.

On the other hand, Proposition 41 — a proposal that would have required audits for new state special taxes, and also could have blocked the billionaire tax — was headed for defeat.

Supporters of Proposition 40 tried to convince voters that taxing roughly 200 billionaires was the solution to raise $100 billion needed to offset federal healthcare cuts.

This week, the wealth tax’s supporters emphasized the high stakes. People won’t be able to afford healthcare coverage, children will die and hospitals will shutter, they said, if California lawmakers don’t find a way to get more funding.

“If Sacramento fails to protect patients and deliver a real solution that makes billionaires pay their fair share, healthcare workers will pursue every available avenue, up to and including returning to the ballot in 2028 with a billionaire tax,” said Suzanne Jimenez, chief of staff for the SEIU-UHW.

The so-called billionaire tax has become one of the most contested California propositions in years, generating national interest and massive spending by opponents. It also has spawned two rival ballot measures.

Here’s a cheat sheet for sorting it all out.

Proposition 40

The basics

Proposition 40 would impose a one-time 5% tax on California billionaires’ assets. The tax applies to people with a net worth of at least $1 billion who resided in California on Jan. 1.

Impact

Ninety percent of the tax would fund healthcare, and 10% would go toward education and food assistance.

The tax would affect hundreds of billionaires whose net worth includes assets such as their businesses, stocks and other investments. Real property, pensions and retirement accounts generally would be excluded.

Proposition 41

It’s called the Improving Transparency, Effectiveness and Efficiency in California Government Act. But it is deeply connected to Proposition 40 and is funded by foes of the billionaire tax.

The basics

Proposition 41 requires the state auditor to review programs funded by proposed special taxes before they appear on the ballot. More importantly, it also prohibits new state taxes from being exempted from a voter-approved state spending limit.

Impact

The Legislative Analyst’s Office says passage of Proposition 41 could prevent Proposition 40, the proposed billionaire tax, from becoming law even if voters approve it. This could happen if Proposition 41 receives more “yes” votes than Proposition 40.

Proposition 42

Proposition 42 would limit the state’s ability to impose certain new taxes. But it’s more complicated and far-reaching than that description might sound. And, yes, it’s also backed by opponents of Proposition 40.

The basics

Proposition 42 would prohibit new taxes on “retirement holdings, individually owned assets, and other forms of personal savings” that take effect after Jan. 1, 2026. It also would bar retroactive taxes on past earnings unless the state is using revenue from the tax to respond to emergencies such as a fire or a flood.

Impact

The Legislative Analyst’s Office says Proposition 42 could nullify Proposition 40 because the two measures conflict with each other. If voters approve both, the one with the most “yes” votes generally would become law, the office says.

Dig deeper

The billionaire tax was pushed by the Service Employees International Union-United Healthcare Workers West and has some labor and progressive support, including from Sen. Bernie Sanders (I-Vt.) and the state Democratic Party. They say the tax is needed to help the less fortunate and that the super-rich can afford it. But key Democrats and some key unions are not supporting it.

Critics include some of California’s richest people, and they are spending a fortune to defeat it. They say it will hurt innovation and drive the wealthy out of the state, hurting the treasury.

More reading

A powerful union and the birth of the billionaire tax (L.A. Times)

Why unions are divided over Prop. 40 (L.A. Times)

The Google co-founder fighting the billionaire tax (L.A. Times)

Inside the massive spending to defeat Prop. 40 (L.A. Times)

How the billionaire tax could spark national movement (The New Yorker)

The academics behind Prop. 40 (Sacramento Bee)

Will Prop. 40 reallly bring an exodus? (L.A. Times)

Why healthcare is divided by Prop. 40 (Bloomberg)

Taxing the “ultrarich,” a guide (New York Times)

Actor and singer Cheyenne Jackson, who has starred on Broadway and held roles on dozens of television series including “American Horror Story,” “30 Rock” and “Glee,” had never considered that he might lose his health insurance.

But in a grim moment last year, he realized he was several thousand dollars short of the roughly $28,000-annual minimum to qualify for healthcare through actors union SAG-AFTRA. Otherwise, he would lose the plan that also covered his husband and their 11-year-old twins.

“Auditions weren’t coming in. It was just a really lean, lean time,” Jackson said. “I think I just took my insurance for granted. I thought it would always happen.”

Jackson and other actors are speaking openly about struggles qualifying for SAG-AFTRA healthcare amid declines in film and television production in Hollywood, an exodus of film jobs abroad, job loss from industry consolidation and concerns of AI incursions.

Jackson reflected on the experience while on a layover Sunday in Atlanta’s airport for his one-man musical act, “Midlife Torso Tour.” He decided to offer to spotlight other union members on social media who were short on their earnings. Within 24 hours of posting about the project idea on Instagram, he had received hundreds of messages, he said.

Jackson credited his friend Kathy Bates, the Oscar- and Emmy-winning actor he worked with on four seasons of “American Horror Story,” for helping him pull through last year. He had texted her describing his plight. She called him back within five minutes and told him, “I have good news and bad news,” he recalled.

The good news, she explained, was that she got him a part on “Matlock,” the CBS reimagining of an ’80s legal drama where she stars as a brilliant criminal defense attorney. The bad news was that he would have only four lines and his character wouldn’t have a name.

“I was like, ‘Sign me up!’” Jackson said. “I was grateful, and I showed up and did my four lines.”

Bates had “really paid it forward,” he said.

Actors’ health insurance plans are typically managed by performing arts unions rather than dispensed by a single corporate employer. Producers and studios contribute to a shared health fund based on union contracts, wages and hours worked. If workers accumulate a preset number of hours or pay, they can qualify for up to a year of coverage.

But dry spells and uncertainty in the industry because of the COVID-19 pandemic shutdown and industry strikes have shed light on actors’ struggles to keep insurance as work dwindles. Several years ago, stories proliferated of performers losing health insurance as they contended with heart problems or underwent cancer treatment, and in recent months, actors have again aired concerns.

“I Saw the TV Glow” star Jack Haven posted a video on YouTube in September saying they were “in a bit of an emergency situation.” Haven said they needed to earn $4,000 by the end of the month to keep their insurance. In the video, Haven said they would do “pretty much any job.”

This month, former Nickelodeon star Drake Bell of “Drake & Josh” posted a screenshot of SAG-AFTRA’s health plan website showing that he needed to earn about $11,450 more to qualify.

“Do not become an actor. Do not join SAG,” Bell wrote, using a middle finger emoji and tagging the union’s president, Sean Astin, in the post.

SAG-AFTRA spokesperson Pamela Greenwalt did not respond to a request for comment. But the union has long been open about the financial effects of the pandemic and other industry headwinds that have led to lower employer contributions.

In December 2020, a group of SAG-AFTRA members sued the union’s board of trustees over changes to the health plan. Actors 65 years and older who vested their pensions could no longer count their earnings from residuals in the annual threshold. A provision allowing actors older than 40 with a decade of credits to qualify for coverage at a reduced level of $13,000 in annual earnings was also eliminated.

The union acknowledged renewed challenges during the SAG-AFTRA strike in 2023. The union’s national executive director, Duncan Crabtree-Ireland, told The Times that year that earning enough to qualify for health coverage had become a “real source of anxiety and concern for many members.”

At a meeting of the union’s national board over the weekend at its Miracle Mile office, Astin in a recorded speech addressed members’ frustrations about economic pressures, saying that the union is using “every bit of leverage we have to make sure working performers have a place in whatever this industry becomes.”

It can take years for members to build up enough union work to qualify for the health insurance. Some who have worked in the industry for years never do. Reportedly only about 14% of the union’s 160,000 members qualify for the union’s healthcare. Of SAG-AFTRA’s membership, which also includes dancers, DJs, journalists and radio program hosts, more than 100,000 members are actors and performers.

Miller Tai, a voice actor on the new Paramount+ animated film “Avatar Aang: The Last Airbender,” said he joined the union in 2017 and had not struggled in recent years to meet the earnings minimum, having qualified for the last seven years. He feels that the noise on social media obscures the actual problem: a broken healthcare industry that is hurting people beyond just actors.

“We have a greedy system raising prices by the second,” Tai said. “This is a problem for any sector where we rely on our employers for healthcare.”

In 2027, the earnings minimum will rise to $28,933. Quarterly premiums will rise from $375 to $390 for one participant, with higher amounts for added dependents. Actors with certain credits who lose their eligibility can temporarily keep their health coverage at a reduced rate for up to 18 months through the federal program known as COBRA, according to the union’s website.

Jackson said starting over every year is tough and unpredictable even for people like him who have been in many television shows and make “OK money on residuals.” He said that although one year he might make $300,000 from acting, the next he might make closer to 5% of that amount. He said that he scraped together his minimum earnings this year by taking on more commercial gigs and acting in a vertically filmed microdrama.

“I ended up doing a few things that I have never done before and never thought I would,” Jackson said.

Jackson’s social media project now has a home on Instagram called One Job Away, and he began posting Tuesday morning. His manager’s assistants and others on his team are combing through requests, he said. More than a dozen photos of actors have already been posted, with captions listing the amount they need to make to hit their earnings minimum and describing their past credits.

“To me, it didn’t seem that big of a deal to say I’m struggling and I need to find that next gig,” he said. “But I understand why for a lot of people they don’t want to say that. They don’t want to look needy or look whatever. I do get it, but I think the more we talk about it, the less shame and the less stigma there will be around it, because it just is happening.”