SACRAMENTO — A billionaire-funded political group gave a $5-million donation to the campaign opposing California’s proposed wealth tax, the first of many expected in the expensive fight over a ballot question dividing the state.
If approved by voters, Proposition 40 would impose a one-time 5% tax on the assets of billionaires who were residing in the state at the start of this year to pay primarily for healthcare.
The ballot measure has splintered California Democrats and their allies, who are at odds over which public services would receive a portion of the revenue and Proposition 40’s long-term impact on the state budget.
Gov. Gavin Newsom, Democratic gubernatorial candidate Xavier Becerra and groups including Planned Parenthood Affiliates of California and the California Teachers Assn. oppose the tax, arguing it could push many of the state’s biggest taxpayers to relocate and in effect destabilize the state’s finances.
On Monday, nine Democratic state lawmakers announced their opposition to Proposition 40, writing in an open letter to voters that “while well-intentioned, this measure will blow a massive hole in our state budget in the years ahead and undermine our ability to sustain investments in the very priorities Prop 40 claims to support.” Its signers included Assemblymembers Jacqui Irwin (D-Thousand Oaks), Lisa Calderon (D-Whittier) and John Harabedian (D-Pasadena).
The California Democratic Party, the California Federation of Labor Unions and progressive officials including Sen. Bernie Sanders (I-VT) and Rep. Ro Khanna (D-Fremont) support the tax, which is intended to raise roughly $100 billion over five years to backfill federal cuts to healthcare and other social safety net programs by President Trump and the Republican-led Congress.
To this point, Building a Better California — a group funded by Google co-founder Sergey Brin and other members of the Silicon Valley elite — has focused on qualifying two ballot measures meant to defang the billionaire tax while maintaining a neutral position on Proposition 40 itself.
That changed over the weekend when the group of billionaires officially came out against the measure and reported the $5-million donation to the anti-Proposition 40 campaign backed by teachers and firefighters unions.
A handful of billionaires have pumped more than $156 million into Building a Better California, mostly from Brin, who has given more than $100 million to the group. It has also received more than $17 million from venture capitalist L. John Doerr, $12 million from Ripple Labs founder Chris Larsen and $3 million from philanthropist and former Google Chief Executive Eric Schmidt.
In addition to opposing the wealth tax, Building a Better California announced support for Proposition 3, which would permanently extend an existing tax on certain high earners, along with two housing bonds.
The group has already spent more than $127 million on two competing ballot measures written to weaken or nullify the billionaire tax: Proposition 41 would require audits for new state special taxes and prohibit new taxes from being excluded from the state spending limit. Proposition 42 would ban new taxes on assets such as as personal property, intellectual property and retirement accounts.
If Proposition 40 passes but either Proposition 41 or Proposition 42 receive more votes, the billionaire tax would be voided.
“A few controversial billionaires like Sergey Brin would rather spend millions to fund shady opposition campaigns than simply pay their fair share in taxes so millions of their fellow Californians don’t lose their healthcare. That’s shameful,” said Debru Carthan, executive vice president of Service Employees International United-Healthcare Workers West, the union that collected the signatures to put the measure on the ballot.
Abby Lunardini, a spokesperson for Building a Better California, said the state “is at an inflection point” due to its high cost of living and taxes.
“California’s future rests on both maintaining our economic competitiveness and making smart, accountable public investments that improve affordability and quality of life for all,” Lunardini wrote in a statement. “It’s rare for such a broad coalition to unite around any single cause in California, but it reflects the potentially devastating impact of this measure on healthcare, education, and our state’s economy.”
The $5-million donation is the largest reported by the Proposition 40 opposition campaign, which wrote in a statement that it “welcomes support from everyone — teachers, doctors, hospitals, community clinics, firefighters, housing advocates, blue-collar unions, entrepreneurs, small businesses, Democrats, and Republicans.”
The donation indicates that members of the opposition coalition — and not billionaires — will play a more visible role in campaign ads.
“Two groups in California that have the most credibility with voters are the teachers and the firefighters,” said Garry South, a Democratic strategist who has worked on past ballot measure campaigns. Making them visible messengers against Proposition 40 “is a very important credibility aspect for the No campaign.”
“Nobody likes political consultants or lawyers. They like firefighters and nurses and teachers,” Republican strategist Matt Rexroad agreed.
