Who Wants to Get Rid of Billionaires?

T he Golden State is trying to impoverish itself. This November, Californians will be voting on Proposition 40, which would impose a (supposedly) one-time 5 percent wealth tax on any resident whose net worth exceeds $1 billion.

Rarely have a ballot proposal’s shortcomings been so visible. At least six billionaires left the state before the end of 2025 to avoid the tax, which would apply to anyone who has lived in California at any time after January 1, 2026. These are Sergey Brin and Larry Page, co-founders of Google; Peter Thiel, co-founder of PayPal and Palantir; famed Hollywood director Steven Spielberg; Don Hankey of the Hankey Group; and Craft Ventures founder David Sacks. A study by economists at the Hoover Institution found that these six tax refugees alone have already removed “$536 billion, or nearly 30 percent of aggregate billionaire wealth, from the tax base.” And because these individuals will no longer pay any income tax in California, the wealth tax is expected to lose almost $25 billion in net revenue in present value terms.

There are roughly 200 billionaires in California. Many of them believe that, if Proposition 40 passes, the retroactive application of its 5 percent levy will be struck down as unconstitutional. It’s likely, however, that many more will head for the exit to avoid any of its future implications. The latest poll on the proposition was conducted between September 4 and 10 by the Public Policy Institute of California. Disturbingly, it found that Proposition 40 enjoys majority support, with 52 percent of respondents in favor. There is a precedent for it. A measure that added a 1 percent surcharge on taxable income over $1 million was passed in 2004, and two measures subsequently raised rates on high-income earners.

And yet, Proposition 40 is such an awful idea that even many of the state’s leading Democrats — including Governor Gavin Newsom — oppose it, as do some reliably leftist labor unions such as the California Teachers Association. Sponsoring the measure, however, is SEIU United Healthcare Workers West, whose leader, Dave Regan, one of the masterminds behind the proposal, might have been using thuggish tactics to build support for it. SEIU International authorized independent investigations into allegations of extortion against Regan. According to the San Francisco Chronicle, Regan is alleged to have “violated the SEIU Constitution by threatening and defaming certain union leaders as part of his campaign to secure endorsements for the Billionaire Tax.”

Joel Pollak, the opinion editor of the California Post, says, “Regan has been using Proposition 40 as his power play among the union elites. But even the unions have had enough. Union leaders don’t like being bossed around by Dave Regan any more than business owners or health clinics do.”

The vote this November will have profound consequences. It may just decide whether California can still be viewed as a desirable place to do business and accumulate assets. It will also send a clear signal about whether the state is under the thrall of thuggish special interest groups such as Regan’s union. If that’s the case, it won’t be just billionaires fleeing. It might also accelerate the departure of the state’s middle class.