Billionaires Bankroll Fight Against Prop 40 Wealth Tax

Sergey Brin says he’s moved out of California. Yet he’s put $102 million into the campaign to kill Proposition 40, a one-time 5% tax on the assets of Californians worth more than $1 billion.

The Google co-founder gave the money to Building a Better California, which is funding two ballot countermeasures that would nullify Proposition 40 even if it wins a majority of votes. The Bloomberg Billionaires Index put Brin’s net worth at $281 billion this week. If officials found he was a California resident on Jan. 1, he could owe as much as $14 billion, leaving him with $267 billion. Los Angeles Times business columnist Michael Hiltzik reports that the campaign against the measure draws much of its funding from the very billionaires who could face the tax.

A Fight Over Numbers No One Can Verify

The measure’s fiscal effects are uncertain, Hiltzik wrote. Every estimate depends on how billionaires respond, including whether they leave the state. Wealth-tax advocates Emmanuel Saez and Gabriel Zucman of UC Berkeley estimate $100 billion in revenue. Joshua D. Rauh of the conservative Hoover Institution put direct revenue at about $40 billion in an analysis published in March. He estimated that departing billionaires could take as much as $5.8 billion a year in personal income-tax liability with them, producing a net present value of negative $24.7 billion over time.

Economist Jeffrey L. Hoopes of the University of North Carolina cautioned that neither side can claim certainty. “These responses are necessarily assumptions. The exact magnitude cannot be known in advance — both author groups are predicting the future,” he said. Hoopes added that he found Rauh’s analysis more plausible.

Opponents have seized on Rauh’s figure, claiming the initiative “will cost $25 billion in lost revenue.” But Rauh’s own calculations span a huge range: from a net present-value gain of $46.7 billion to a net loss of $208 billion. The $24.7 billion loss is only his “central scenario.” Rauh told Hiltzik that citing it is “completely appropriate for public discourse,” while also saying “all wealth tax revenue estimates, including our own, face inherent limitations” and should be understood “as an informed range rather than a precise forecast.”

Questions About the Evidence

Hiltzik questioned the Hoover Institution’s record on California analyses. He cited its claim that the state’s fast-food minimum wage law had devastated employment, a claim that failed to account for seasonal adjustments. He also pointed to a claim that government jobs made up 96.5% of California job growth from January 2022 through the first half of 2024. The real figure was 22%, and Hoover retracted the article. Rauh wrote neither piece.

The case for a billionaire exodus rests partly on thinner ground. Rauh lists 10 billionaires with a combined net worth of $784.5 billion who are known or reported to have left California, though some started relocating before the tax was proposed. He said the total might be a substantial underestimate, citing a Free Press article by Mike Solana headlined “The Great California Wealth Exodus.” Solana’s Free Press biography calls him “mayor of San Francisco,” a job Hiltzik says he has never held. Solana drew on conversations with 21 billionaires, most planning to leave and all “developing an exit plan.” He didn’t name them. Rauh called the interviews “on-the-record”; Hiltzik countered that interviews with unidentified people aren’t. Rauh later said the interviews “are not part of the analysis” of billionaire flight. Hiltzik said he couldn’t find a way to reach Solana.

What the Measure Actually Does

The tax applies to billionaires residing in California on Jan. 1, 2026, with net worth calculated on Dec. 31, 2026. It exempts pensions and most individual retirement accounts. Opponents say it would tax retirement accounts “for the first time,” but the exemption excludes only Roth-type accounts worth $10 million or more, balances Hiltzik said are held almost exclusively by the 1%. The Legislature could extend the tax beyond one year or lower the threshold below $1 billion, but only with a two-thirds vote in each chamber.

Opponents also argue the state would struggle to identify and value taxable wealth. They say the tax’s retroactivity could invite constitutional challenges.

Politics Inside the Democratic Coalition

Service Employees International Union-United Healthcare Workers West put the proposal on the ballot to help fill a healthcare-program budget gap created by the Republican Congress’ budget bill last year. Democrats who run the Legislature haven’t embraced a wealth tax. Gov. Gavin Newsom and Xavier Becerra, the Democrat running to succeed the term-limited governor, both oppose Proposition 40. Other unions have been cool to it, prompting internal disputes among organized-labor groups, as Seema Mehta, Nicole Nixon and Taryn Luna reported.

Why This Matters:

Proposition 40 poses a fiscal and moral question: who should cover a healthcare funding gap opened by federal budget decisions? The people best positioned to pay are also financing the campaign to stop it, with Brin alone contributing $102 million. Voters must weigh that as they sort through competing projections, none of which can be verified in advance. Even the economist behind the most-cited number calls it a range, not a forecast. Hiltzik framed the choice as political as well as fiscal, tied to views on economic inequality and the influence of billionaires like Elon Musk. With the Legislature unwilling to act and some unions divided, the ballot may be the only place this debate gets settled. Voters will decide with imperfect information supplied largely by interested parties.