California Prop 40: $300 Million Effort to Block Billionaire Tax

California residents face a complex decision on their November 3 ballots regarding a proposed one-time 5 percent tax on the assets of state billionaires. The campaign against the measure, known as Prop 40, has become the most expensive ballot fight in state history, according to David McCuan, a political science professor at Sonoma State University who tracks local elections.

Opponents have donated more than $300 million to defeat the proposal. This sum includes contributions from Google co-founder Sergey Brin, DoorDash founder Tony Xu, Stripe co-founder Patrick Collison, Ripple co-executive chairman Chris Larsen, and venture capitalists John Doerr, Michael Moritz, and Vinod Khosla. In contrast, supporters of the tax have raised only $32 million.

Meta founder Mark Zuckerberg has not contributed money to the opposition, but his actions are influencing the campaign. Meta SEC filings indicate that Zuckerberg told the company board, which includes Xu and Collison, that he would purchase a home outside the state to avoid the tax. The board subsequently created a new class of shares that Zuckerberg could use to pay the tax, a move designed to protect the company's stock price.

The high volume of advertising and mailers has generated confusion among the electorate. Brian Galle, an economics professor at the University of California at Berkeley who helped write the proposal, received a flyer claiming the tax could apply to anyone, including those with retirement savings. Galle stated those claims were not in his draft. Ashley Craig, a volunteer for the pro-tax group Patriotic Millionaires, frequently hears from voters that the measure contains secret provisions to tax everyone. Any modification to the tax would require a two-thirds majority in the state assembly and must align with the original intent of the measure.

Galle described the spending as a demonstration of the inequality the tax intends to address. He noted that Prop 40 aims to make democracy more equal, but billionaires are using their wealth to avoid that outcome, referencing the Supreme Court's Citizens United v FEC ruling. Francesco Trebbi, a professor at Berkeley's Haas School of Business, characterized the contest as "Sergey Brin v millions of Californians," arguing it erodes trust in the political system.

The battle highlights a division within the Democratic Party. While the state party has endorsed the tax, Craig reported receiving limited ground support from it. McCuan views the measure as a test between progressives and moderates, suggesting a success could inspire progressive candidates in the 2028 presidential race. Governor Gavin Newsom, who is considering a 2028 run, opposes the tax, calling it "poorly written" and warning it could harm the state if billionaires leave. The authors of the tax estimate the wealth of these billionaires at 2.3 trillion dollars. Gubernatorial candidate Xavier Becerra and former congresswoman Katie Porter also oppose the measure.

Opponents have supported two additional ballot measures. One bars new state taxes on personal property or retroactive taxes, while the other requires state auditors to review proposed tax measures for financial impact before a vote. If either of these passes with more votes than the billionaire tax, it could negate the tax even if voters approve Prop 40.

A recent Public Policy Institute of California poll found that voters narrowly support the tax but also back the two measures intended to stop it. Mark Baldassare, the institute's statewide survey director, noted that only about one-third of citizen initiatives pass, placing the burden on the yes side. He plans to conduct another poll as voters receive state guides explaining the measures.

Suzane Jiminez, chief of staff at the Service Employees International Union health workers union, which sponsored the measure, expressed confidence in the campaign. She reported that 3,000 volunteers have recently been knocking on doors and distributing flyers. Senator Bernie Sanders and Congressman Ro Khanna have also rallied support across the state. McCuan suggested that even a defeat could benefit the backers, who could blame moderates and use big tech as a political target.