Billionaires Fund Ballot Measures to Block California Tax

Sergey Brin gave $102 million to a campaign funding two ballot countermeasures designed to nullify California’s Proposition 40, even if voters approve it. The proposed measure would impose a one-time 5% tax on assets held by Californians worth more than $1 billion. The countermeasures pose a blunt question: who gets the final say when a ballot measure threatens billionaire wealth?

Money Against the Ballot

Google co-founder Brin says he has moved out of California. The Bloomberg Billionaires Index estimated his net worth at $281 billion that week; if officials found that he was a California resident on Jan. 1, he could owe as much as $14 billion, leaving him with $267 billion. His contribution went to Building a Better California, which is funding measures that would nullify Proposition 40 after a majority vote.

The tax’s potential revenue remains disputed. Economist Joshua D. Rauh of the conservative Hoover Institution estimated in a March analysis that it would generate about $40 billion in direct revenue. Wealth-tax advocates Emmanuel Saez and Gabriel Zucman of UC Berkeley put the figure at $100 billion.

Rauh also estimated that billionaires leaving California could take as much as $5.8 billion in annual personal income-tax liability with them. His central scenario puts the tax’s net present value at a negative $24.7 billion, or a loss to the state over time. His calculations, though, range from a net present-value gain of $46.7 billion to a net loss of $208 billion. That’s a wide range. It isn’t a settled forecast.

Economist Jeffrey L. Hoopes of the University of North Carolina said, “These responses are necessarily assumptions. The exact magnitude cannot be known in advance — both author groups are predicting the future.” Hoopes said he found Rauh’s analysis more plausible.

The Forecasts Behind the Fight

Opponents have cited Rauh’s estimate to claim the initiative “will cost $25 billion in lost revenue,” Los Angeles Times Business Columnist Michael Hiltzik wrote. Asked if that use was proper, Rauh said, “it's completely appropriate for public discourse and conclusions to cite the central scenario.” He also said “all wealth tax revenue estimates, including our own, face inherent limitations,” describing his estimate as “an informed range rather than a precise forecast.”

Hiltzik challenged the Hoover Institution’s record on California analyses. He pointed to its claim that the state’s minimum wage law for fast-food workers had devastated employment, which failed to account for seasonal adjustments. He also cited a claim that government jobs accounted for 96.5% of California job growth from January 2022 through the first half of 2024. The actual figure was 22%, and Hoover retracted the article. Rauh didn’t write either piece.

Rauh lists 10 billionaires with a combined net worth of $784.5 billion who are known or reported to have left California. Some left before the tax was proposed and had already taken steps to relocate their residency. Rauh said the total might be a substantial underestimate, citing an article by Mike Solana in the conservative Free Press.

Solana’s article, “The Great California Wealth Exodus,” described conversations with 21 billionaires. Most, he said, planned to leave, and all were “developing an exit plan”; he didn’t identify them. Rauh called the interviews “on-the-record.” Hiltzik argued that interviews with unidentified people aren’t on the record. Rauh told Hiltzik the purported interviews “are not part of the analysis” of billionaire flight.

A Ballot Fight With Limits

The Service Employees International Union-United Healthcare Workers West placed Proposition 40 on the ballot to help fill a healthcare-program budget gap created by the Republican Congress' budget bill the previous year. The California Legislature, though dominated by Democrats, hasn’t embraced a wealth tax. Democratic Gov. Gavin Newsom and Xavier Becerra, the Democrat running to succeed Newsom, who is term-limited, oppose the measure. Other unions have been cool to it, prompting internal disputes among organized-labor groups.

The measure would let the Legislature change the tax, including extending it beyond one year or applying it to people worth less than $1 billion. Those changes would require a two-thirds vote in each legislative chamber. Opponents say the tax would be difficult to administer because the state would have to identify and value taxable wealth, and that its retroactivity could invite constitutional challenges. It applies to billionaires residing in California on Jan. 1, 2026, while officials would calculate their net worth on Dec. 31, 2026.

Opponents also claim the measure would tax retirement accounts “for the first time.” It exempts pensions and most individual retirement accounts, except Roth IRA and other Roth-type accounts worth $10 million or more, a balance Hiltzik said is held almost exclusively by the 1%. Voters are weighing fiscal forecasts alongside questions of inequality, billionaire influence, and the risks and potential effects of the tax. A majority vote may not settle the matter: the campaign bankrolled by a billionaire is funding countermeasures intended to wipe Proposition 40 away.