California's billionaire class is mobilising against a proposed wealth tax that has secured the required signatures to appear on the November ballot. Despite garnering significant public backing, the measure faces fierce opposition from influential tech moguls and Governor Gavin Newsom, who are working to prevent it reaching voters.
The 'Billionaires Tax' proposal, championed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), aims to fund critical public services such as healthcare, food assistance, and education programmes in California. Initially conceived as a 5% levy on the wealth of residents exceeding $1 billion, proponents have since reduced the proposed tax rate to 2% in an attempt to foster broader support and negotiate a compromise.
However, some of Silicon Valley's most influential billionaires are leading the charge against the measure. Former Google executives Sergey Brin and Eric Schmidt have reportedly donated tens of millions of dollars to Super PACs specifically designed to defeat the proposal. Other prominent tech entrepreneurs, including Palantir co-founder Peter Thiel and Stripe CEO Patrick Collison, have also funded efforts to quash the tax. Some high-profile individuals, such as Google co-founder Larry Page and Meta co-founder Mark Zuckerberg, have already relocated from California or are in the process of doing so - an exodus critics suggest would accelerate if the measure passed.
California Governor Gavin Newsom has emerged as a vocal opponent of the wealth tax. He believes that such state-level taxes create a 'race to the bottom', arguing they would incentivise billionaires to leave California, ultimately stripping the state of valuable revenue. Reports suggest that Governor Newsom is actively forming a coalition to negotiate a deal with SEIU-UHW, aiming to persuade the union to withdraw the proposal before the California Secretary of State's certification deadline of 25th June.
Political analysts suggest that the union may be using the ballot measure as a 'gun-behind-the-door' tactic to negotiate a more favourable outcome without necessarily engaging in a costly ballot measure campaign, which could run into hundreds of millions of dollars. As Professor David McCuan at Sonoma State University pointed out, this strategy allows SEIU-UHW to hold significant bargaining power in negotiations with the state's political establishment.