California could become the first US state to tax the net worth of billionaires under a ballot measure that has divided liberal leaders and triggered an expensive ballot fight as the ultra-rich scramble to figure out whether they would pay the tax or flee.
Proposition 40 would impose a one-time five per cent tax on the wealth of Californians whose net worth exceeds $US1 billion ($A1.4 billion), with most of the revenue dedicated to replacing federal funding cuts to health care.
Vermont senator Bernie Sanders has framed the proposal as a monumental step toward reining in deep wealth inequality by ensuring the ultra-rich pay their fair share.
But Democratic Governor Gavin Newsom warns it would prompt the state’s wealthiest to move out of California and take their tax money with them.
The “no” side has raised roughly 10 times as much as the “yes” side going into Tuesday’s vote, thanks in large part to tech moguls and venture capitalists, who have poured millions of dollars into a political action committee fighting the measure.
Billionaires are already bracing for its approval.
Some of them, including Google co-founders Sergey Brin and Larry Page, started cutting ties with the state after the measure was unveiled.
Mark Zuckerberg said he would stay in California for eight years and made a deal with Meta that would help him pay the tax without losing his ownership stake in the company.
Backers of the proposed tax, led by the powerful union SEIU United Healthcare Workers West, say it is needed to help the state backfill the federal funding cuts.
The union estimates the state will lose $US100 billion in federal healthcare funding over five years.
“It’s time to collect those taxes so we can ensure that our healthcare system is still safe,” said Lorena Gonzalez, president of the California Federation of Labor Unions.
But some traditional Democratic allies, including Planned Parenthood and the California Teachers Association, are part of a coalition opposing it.
They are concerned about how the tax revenue would be divvied up and about the potential impact on the state’s budget if there’s a mass exodus of wealthy taxpayers.
California’s budget relies heavily on the income tax of the state’s richest residents.
Likely voters were slightly more likely to oppose the measure than support it in a poll conducted in mid-October by the Public Policy Institute of California, with 52 per cent saying they would vote “no” and 46 per cent saying they would vote “yes”.
Progressive politicians, including Sanders and Massachusetts senator Elizabeth Warren, have long supported a federal wealth tax.
Newsom says a California wealth tax would disadvantage the state, but he supports a national minimum tax on anyone with a net worth above $US100 million.
Australian Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national newswire and has been delivering accurate, reliable and fast news content to the media industry, government and corporate sector for 85 years. We keep Australia informed.
