Tech moguls up in arms, but California billionaire tax qualifies for ballot
In California, an initiative to tax the state’s wealthiest residents has qualified for the November ballot despite persistent opposition by the tech moguls and Governor Gavin Newsom.
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California's billionaire tax has qualified for November's ballot despite fierce opposition from tech moguls and Governor Newsom.
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The proposed one-time 5% levy would target roughly 200 billionaires, with Larry Page alone facing a $13 billion bill.
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Backers have until June 25th to push forward or negotiate a deal, as legal challenges over retroactivity loom large.
The California Billionaire Tax Act, colloquially known as the billionaire tax, would levy a one-time 5% tax on any California resident worth more than $1 billion.
The measure, backed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), is proposed as a means of funding California’s struggling healthcare, food assistance, and education programs.
In the state, it’s popular. That’s why the proposal has gathered enough signatures to qualify for the November ballot.
But the bill is fiercely opposed by the billionaires it targets and by Governor Newsom, who has consistently refused to even consider any tax increases throughout his tenure. The governor is now vowing to block the proposal from going to a vote.
The billionaires and their deep pockets are also making an impact. Earlier this year, Google co-founder Larry Page, Meta CEO Mark Zuckerberg, Palantir co-founder Peter Thiel, and others all indicated they’d be leaving California for tax-friendlier states such as Florida or Texas.
If passed, the law would retroactively apply to California residents as of January 1st. The billionaires – roughly 200 of them in the state – would have 5 years to pay it.
For instance, Page, whose current net worth is around $264 billion, would pay about $13 billion in a one-time payment. Thiel would have to pay $1.3 billion.
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On the other hand, Nvidia CEO Jensen Huang, worth at least $169 billion, told Bloomberg Television in January he was “perfectly fine” with the proposal: “We chose to live in Silicon Valley. And whatever taxes I guess they would like to apply, so be it.”
And Ro Khanna, the California representative for Silicon Valley who champions the idea of a wealth tax, has predicted that tech billionaires will probably stay in the state because that’s where the industry, innovation, and talent pools are located.
However, experts say the measure, should it pass, would certainly face legal challenges, especially over the retroactive nature of the tax.
That’s probably why the whole discussion has now become a sort of staring contest. Backers of the proposal have until June 25th to decide whether to move forward or potentially strike a deal.
On Thursday, the Billionaire Tax Now Coalition, a group headed by the SEIU-UHW, sent a letter to Newsom calling on him to back a modified 2% wealth tax on the state’s billionaires.
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