California's Proposition 40, a one-time 5% wealth tax on billionaires, is polling close ahead of Election Day on Nov. 3. The measure has divided politicians and economists over its projected revenue and potential to drive the ultra-wealthy from the state.
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01Summary
- 01Proposition 40 would impose a one-time 5% wealth tax on California residents with a net worth above $1 billion.
- 02A September UC Berkeley IGS poll found 45% of likely voters in favour and 42% against, with 13% undecided.
- 03The nonpartisan Legislative Analyst's Office estimates the tax could raise 'tens of billions of dollars' but notes possible ongoing income tax losses of under $1 billion per year from departing billionaires.
- 04The Hoover Institution calculates a net present value loss of $38.9 billion assuming permanent departures of billionaires paying $3.3–$5.8bn annually in state income taxes.
- 05California Governor Gavin Newsom has announced he will vote No, arguing the tax could weaken the state's long-term tax base by driving billionaires away.
02Why it matters
The outcome of this vote could set a precedent for other states mulling wealth taxes, and directly affect funding for California's healthcare and public services, while also influencing the state's future tax revenue and the behaviour of its wealthiest residents.
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