Proposition 40, which would impose a one-time five-per-cent wealth tax on California’s billionaires, is endorsed by just three members of state’s congressional delegation. It’s opposed by the Democratic governor, Gavin Newsom; his likely successor, Xavier Becerra; the teachers’ union; and, it perhaps goes without saying, nearly all of California’s billionaires. Yet, on November 3rd, it will go in front of the state’s voters, at a moment when the tech leaders of Silicon Valley have plummeted in the public’s esteem. If the initiative passes, the outcome will reverberate well beyond California: a group of Nobel Prize-winning economists recently wrote in a joint statement that it “may well come to be seen as a turning point in the battle between democracy and oligarchy.”
In this week’s issue, the staff writer Nicholas Lemann brilliantly dissects the historical and ideological roots of Prop 40 and reports from Sacramento and Silicon Valley, offering an inside look into a campaign that he describes as a “big, glorious mess.” The proposal, initiated by a stubborn and politically effective union president named Dave Regan, has drawn a furious response from the state’s tech billionaires, who have spent a small fortune fighting it, making this one of the most expensive campaigns of the midterms. Proponents argue that the revenue it would collect is necessary to make up for federal cuts to Medicaid; opponents argue that it would simply drive wealth from the state. (Garry Tan, the head of the investment firm Y Combinator, has called it “a destroy tech in California proposition.”) The opposition has managed to get its own measures, Propositions 41 and 42, on the ballot; if either gets more votes than Proposition 40, it would nullify the wealth tax even if it passes.
Gavin Newsom, for his part, has come out in favor of wealth taxes—just not this one. The presumed 2028 Presidential candidate has called for a national tax on billionaires, and his stance on the issue has helped thrust it to the center of primary politicking to come. “It’s going to be a raise-your-hand moment at the early Democratic-primary debates,” one political consultant says. Representative Ro Khanna, one of the rare Democratic elected officials in California who backs Prop 40—and another possible Presidential hopeful—tells Lemann that most of his colleagues are misreading the moment. “There’s a view that the biggest threat to American democracy is Donald Trump and not winning the House or Senate, and that we would be foolish to kneecap the prominent billionaires who are on our side,” Khanna says. Instead, he adds, “People don’t fully see that this is a defining fight for the soul of the Democratic Party.”
