Billionaires Fund Fight Against California Wealth Tax

Sergey Brin gave $102 million to a campaign backing two measures that could nullify California’s Proposition 40, even if voters approve it. The Google co-founder could owe as much as $14 billion under the proposed tax.

Proposition 40 would impose a one-time 5% tax on assets held by Californians with a net worth above $1 billion. The Bloomberg Billionaires Index put Brin’s net worth at $281 billion that week. If officials found he lived in California on Jan. 1, 2026, the tax could leave him with $267 billion.

Brin says he has moved out of California. He gave his contribution to Building a Better California, which funds two ballot countermeasures intended to nullify Proposition 40 even if it wins a majority of votes. Billionaires who could face the tax provide most of the campaign’s funding.

The Revenue Dispute

In an analysis published in March, economist Joshua D. Rauh of the conservative Hoover Institution estimated that the tax would bring in about $40 billion in direct revenue. Wealth-tax advocates Emmanuel Saez and Gabriel Zucman of UC Berkeley put the figure at $100 billion.

Rauh estimated that billionaires who leave could take up to $5.8 billion in annual personal income-tax liability with them. His central scenario projects a net present-value loss of $24.7 billion for 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. Opponents have cited his central estimate to argue the initiative “will cost $25 billion in lost revenue,” Los Angeles Times Business Columnist Michael Hiltzik wrote.

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

Rauh said the campaign’s use of his central scenario was “completely appropriate for public discourse and conclusions to cite.” He added that “all wealth tax revenue estimates, including our own, face inherent limitations,” and called his estimate “an informed range rather than a precise forecast.”

Hiltzik challenged the Hoover Institution’s record on California. He pointed to a claim that the state’s minimum wage law for fast-food workers had devastated employment, a claim that failed to account for seasonal adjustments. He also cited an article saying government jobs made up 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 wrote neither piece.

Labor, State Policy and the Tax’s Reach

Service Employees International Union-United Healthcare Workers West put Proposition 40 on the ballot to help cover 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 Proposition 40. Other unions have been cool to the measure, setting off disputes within organized labor, as Seema Mehta, Nicole Nixon and Taryn Luna reported.

The initiative would allow the Legislature to change the tax, including extending it beyond one year or applying it to people worth less than $1 billion. Changes would need a two-thirds vote in each legislative chamber.

Opponents say the tax would apply to retirement accounts “for the first time.” The measure exempts pensions and most individual retirement accounts, except Roth IRA and other Roth-type accounts worth $10 million or more. Hiltzik wrote that people in the 1% hold almost all such balances.

Opponents also say the state would struggle to identify and value taxable wealth, and that the tax’s retroactivity could prompt constitutional challenges. The tax applies to billionaires living in California on Jan. 1, 2026, while officials would calculate their net worth on Dec. 31, 2026.

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 could be a substantial underestimate, citing an article based on conversations with 21 billionaires. The article said most planned to leave and all were “developing an exit plan,” but didn’t name them.

Hiltzik argued that interviews with unidentified people aren’t on the record. Rauh told him the interviews “are not part of the analysis” of billionaire flight. Hiltzik wrote that voters’ decision turns on their views about economic inequality, billionaires’ wealth and influence, and the tax’s risks and potential effects.