California: vote on tax proposal fails – billionaire tax rejected

Only 47.2 percent of voters supported the introduction of the billionaire tax. A preliminary count last Wednesday, with 60 percent of the votes, suggested a result that has now been confirmed.

The proposal stipulated that individuals with a net worth of at least one billion US dollars – a total of approximately 2.3 trillion US dollars – would have to pay a one-time levy of five percent of their assets. The revenue should primarily flow into healthcare, education, and food assistance to compensate for funding gaps due to the loss of federal funds.

Proponents of the tax estimated revenues of around 100 billion US dollars, while researchers at Stanford University presented a more conservative estimate of 30 billion US dollars. Some billionaires had reportedly already taken steps to relocate their residences, which would have further reduced the revenue.

The election campaign was marked by significant financial inequalities: opponents of the tax collected roughly ten times as much money as their supporters. Sergey Brin alone donated over 100 million US dollars to an organization that campaigned against the proposal. Governor Gavin Newsom also opposed the special levy and warned of potential tax shortfalls due to emigration.

In contrast, Mark Zuckerberg used a relocation threat to enforce a new equity structure at Instagram. The co-founder and CEO of Nvidia, Jensen Huang, stated that he would not leave California.

The planned levy was also intended to address the problem that super-rich individuals in the USA can often avoid taxes by securing loans with their stock holdings.