California wealth tax fight heats up as billionaire-backed group pours $5 million into campaign

Building a Better California, an advocacy group backed by some of Silicon Valley's wealthiest figures, has poured $5 million into the campaign opposing Proposition 40, intensifying a fight over how the state should fund healthcare and other essential services, according to the Los Angeles Times.

Here's what to know

On Nov. 3, California voters will decide whether to impose a one-time 5% tax on the assets of state billionaires to support food assistance programs, healthcare, and public education. 

Supporters of Proposition 40 say it could bring in roughly $100 billion over five years. They include the California Democratic Party, the California Federation of Labor Unions,  Vermont Sen. Bernie Sanders, and Rep. Ro Khanna, who serves California's 17th Congressional District.

However, as the LA Times reported, the measure has split Democrats, labor groups, and progressive organizations. 

Opponents include Gov. Gavin Newsom, Democratic gubernatorial candidate Xavier Becerra, Planned Parenthood Affiliates of California, and the California Teachers Association. They argue the tax could drive top taxpayers out of California and create future budget problems.

"While well-intentioned, this measure will blow a massive hole in our state budget in the years ahead and undermine our ability to sustain investments in the very priorities Prop 40 claims to support," nine Democratic state lawmakers wrote in an open letter, per the Times. 

Why is this concerning?

Building a Better California, whose backers include Google co-founder Sergey Brin, has also spent more than $127 million on two separate ballot measures aimed at either weakening or nullifying the billionaire tax. 

One of those measures, Proposition 41, would trigger audits of new state special taxes and prevent new taxes from being exempted from the state spending limit.

The other, Proposition 42, would bar new taxes on assets like personal property, intellectual property, and retirement accounts.

If Proposition 40 passes but either Proposition 41 or Proposition 42 receives more votes, the wealth tax would not go into effect.

What happens next?

The debate is heating up before the ballot boxes are open this fall. 

Abby Lunardini, a spokesperson for Building a Better California, argued that the state "is at an inflection point" because of high living costs and taxes, per the Times. 

In her statement, Lunardini said California needs to remain economically competitive while making "smart, accountable public investments that improve affordability and quality of life for all."

As part of the plan to stop Proposition 40, the opposition campaign has cast a wide net, saying it "welcomes support from everyone — teachers, doctors, hospitals, community clinics, firefighters, housing advocates, blue-collar unions, entrepreneurs, small businesses, Democrats, and Republicans," according to the Times.  

Opposing groups continue to push back on Building a Better California's claims. 

"A few controversial billionaires like Sergey Brin would rather spend millions to fund shady opposition campaigns than simply pay their fair share in taxes so millions of their fellow Californians don't lose their healthcare," said Debru Carthan, executive vice president of Service Employees International United-Healthcare Workers West. "That's shameful."

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