California sinks its billionaire tax as a Brin-backed wealth tax ban leads

California voters have rejected Proposition 40, a one-time tax on the wealth of the state’s billionaires. The Associated Press called the race on Monday. California was still counting mail ballots nearly a week after the 3 November election.

The measure would have charged 5% on the net worth of residents worth more than $1bn. It would have been the first tax of its kind in the US, the AP reported. About 53% of voters opposed it with around 83% of the estimated vote counted, Laurel Rosenhall reported for The New York Times.

Tech money against the tax

Google co-founder Sergey Brin gave $102m to Building a Better California, the committee that led the opposition, according to state campaign filings. The committee raised more than $333m, nearly a third of it from Brin, the AP reported. TNW reported in July that tech billionaires had already put $120m into defeating it.

Brin and fellow co-founder Larry Page started cutting ties with California before the vote, according to the AP. Brin is back at Google, working on Gemini. Meta’s Mark Zuckerberg said he would stay in the state for eight years. He also made a share deal with Meta to help him pay the tax without losing his stake. Some Meta shareholders have sued to block that plan.

The tax lost statewide even though San Francisco and Los Angeles counties backed it, Fortune reported. Santa Clara County, home to much of Silicon Valley, voted against it.

Supporters plan another try

The SEIU United Healthcare Workers West union put the tax on the ballot. Most of the money would have replaced federal healthcare funding cuts. The union put the state’s loss at about $100bn over five years. Another 10% would have gone to education and food assistance. Backers said they could return with a new tax in 2028.

“Buying an election is not the same as winning the debate,” the measure’s proponents said in a statement on Monday.

Governor Gavin Newsom opposed the tax and warned it would drive the richest residents out of the state. He supports a national minimum tax on anyone worth more than $100m, the AP reported. A coalition that included Planned Parenthood and the California Medical Association also campaigned against it.

“Proposition 40 was a reckless experiment conducted on our state’s economy with little regard for the harms it would cause,” the coalition said in a statement.

The AP Voter Poll found that most voters under 30 backed the tax. Roughly 7 in 10 voters aged 65 and over voted against it.

A second measure could block the next one

Building a Better California also sponsored Proposition 42, which was ahead with 51.6% of the vote on 10 November, Molly A. Wallace reported for Fortune. The constitutional amendment bars new state taxes on personal property, including business interests, intellectual property and financial assets. It also blocks most taxes that apply retroactively. A third measure, Proposition 41, failed.

Opponents of the billionaire tax argued that voting for Proposition 42 would protect middle-class retirement savings from future taxes, the Times reported. If it passes, a new wealth tax in California would first need voters to undo it, Fortune reported.

In the same election, US voters rejected AI data centres in 40 of 41 local ballot measures.