California voters have defeated Proposition 40, a ballot measure that divided Democrats and ignited fierce opposition over enacting a one-time tax on billionaires.
The ballot measure, which was proposed by a labor union of health care workers, sought to levy a one-time 5 percent tax on the wealth of the state’s billionaires. The union said the tax would offset funding cuts the Trump administration signed into law that could knock 2 million residents out of health insurance.
The proposition was backed by Sen. Bernie Sanders (I-Vermont) and opposed by outgoing Gov. Gavin Newsom, a Democrat who said it would put the state at a disadvantage and that he favored a national wealth tax instead.
A coalition funded by Google’s Sergey Brin, Eric Schmidt and other billionaires spent more than $148 million to defeat the proposal. In total, opponents raised more than $379 million to kill it, making it one of the costliest electoral battles in the history of the state.
Some teachers and labor groups also opposed the measure, concerned that proceeds from the tax were slated mostly for health care, leaving little for other priorities.
Proposition 41, which would have canceled out Proposition 40, also failed.
Many critics feared the measure would hurt the state’s budget in the long run by causing billionaires to flee. About 240 billionaires were living in the state as of Jan. 1 and had a combined $2.05 trillion in wealth, according to researchers.
If the measure had passed, the tax would have applied to people with California residency as of that date who have more than $1 billion in wealth, including their investments, stocks and businesses. It excluded real property, most pensions and retirement accounts, except for Roth IRAs and other Roth-type arrangements exceeding $10 million.
Some billionaires have already left the state, including tech investor and White House official David Sacks, who called the measure an “asset seizure.”
Mark Zuckerberg, who told the board at Meta he was exploring moving out of state, made a deal to let him sell stocks to pay the tax if it passes while retaining absolute control of the company.
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