Californians vote on Tuesday on Proposition 40, which would impose a one-time tax of 5 per cent on the net worth of residents with more than $1bn. About 200 people would be liable: those who were resident on 1 January 2026.
The tax would cover shares, businesses, art, collectibles and intellectual property. Property, pensions and some retirement accounts would be excluded. Nine-tenths of the money would go to state-funded health care, including Medi-Cal, the programme for low-income residents. The rest would go to food assistance and education.
The measure's sponsor is the SEIU-United Healthcare Workers West union. It expects about $100bn over five years. The official ballot estimate is more cautious: a temporary rise in revenue of "tens of billions of dollars" spread over several years, offset by a possible loss of less than $1bn a year in income tax if billionaires leave.
Money on both sides
Opponents have outspent the measure's backers by a wide margin. Building a Better California, a committee co-founded by Sergey Brin and Eric Schmidt, had raised $118m by August. Peter Thiel has given about $100m to a separate campaign led by the California Business Roundtable. Gavin Newsom, the Democratic governor, opposes the tax and has called it "really damaging to the state".
Supporters include Bernie Sanders, the California Democratic Party, the state's main labour federation and six Nobel laureates in economics. They say the proposal would help make up for federal cuts to Medicaid.
Several billionaires moved before the residency deadline, among them Mr Thiel, Larry Page, Mr Brin and Travis Kalanick. Larry Ellison sold his San Francisco house and moved to Nevada. Jensen Huang, the chief executive of Nvidia, who would owe about $8bn, has said he is "perfectly fine with it".
A close race
The polls have tightened. A survey by the Public Policy Institute of California in early September found 52 per cent in favour. Polls taken in late September and early October gave mixed results, with support ranging from 35 to 48 per cent.
Two rival measures complicate the outcome. Propositions 41 and 42, backed by the tax's opponents, would restrict new taxes; if either wins more votes than Proposition 40, the billionaire tax would be void. Critics also argue that taxing residents on the basis of a date in the past is unconstitutional, so a legal challenge is likely if it passes.
