S1: Welcome in San Diego. It's Jade Hindman on this episode of KPBS Midday Edition , we'll break down prop 40 , the billionaire tax. We'll talk about who's fought , who's against it , and why. This is KPBS Midday Edition. Connecting our communities through conversation. You might know prop 40 as the billionaire tax. It would establish a one time , 5% sales tax on California's billionaires to redirect money towards health care funding. While this election cycle , the wealth tax is divided. It's divided California voters and Democratic leaders. Open up your ballot and you'll also find two countermeasures there. Prop 41 and prop 42. They could cancel out prop 40 if it passes. So joining me to talk about it is Nadia Lathan. She covers state politics for Voice of San Diego and Cal matters. Nadia. Welcome to midday edition. Hi.
S2: Hi. Thank you for having me.
S1: So glad to have you on here. Tell me , how would proposition 40 work?
S2: Yeah , proposition 40 would do is it would impose a one time , 5% tax on the assets of California billionaires whose worth. So anyone whose wealth exceeds more than $1 billion and who was a resident as of January 1st of this year. Hmm.
S1: Hmm. And so how many billionaires does California actually have? How much wealth does that present or represent , rather.
S2: Great question. Um , the state has about 200 billionaires , which is more than any other state in the country. And proponents of this measure , they say that of 5% that this this wealth tax at 5% , a one time tax on their wealth could bring in as much as $100 Billion dollars over five years. Just to put it into perspective.
S1: All right. Good. Good on you. California with 200 billionaires. Um , so who brought this proposition forward? Like , what was the motivation there?
S2: Yeah , it was brought forward by Service Employees International Union , United Healthcare West and their union that represents health care workers across the state. And they put it on the ballot. Uh , they say to help backfill what's expected to be billions of dollars in federal funding that California is expected to lose for programs such as Medi-Cal. Um , in , uh , in large part because of President Donald Trump's spending bill last year. And so about 90% of the revenue that this initiative would generate would go towards health care services.
S1: So who are the biggest voices on the know side then? Yeah.
S2: Yeah. On the no side you have an interesting coalition between many of the state's billionaires , including Google co-founder Sergey Brin , who is funding a large portion of the of the no campaign , as well as Democratic leaders such as Governor Gavin Newsom and gubernatorial candidate Javier Becerra. They're also opposed to the measure because they say for for a couple of reasons , but one , they say it's too narrow , that it's if we're to do if the state's to do a wealth tax , it shouldn't just apply to health care services , the revenue that comes from it. And then they also say it'll hurt the state in the long term because it will cause California's , um , you know , tens of its billionaires or several of its billionaires to leave the state. And if they leave , they're gonna also move with their tax income that they give this state. And so they say it'll have long term , uh , negative effects if it were to take effect.
S1: Well , there's also two countermeasures on the ballot prop 41 and prop 42. Can you give us a quick refresher about those? Let's start with prop 41. What would that one do? Yeah.
S2: Yeah. So prop 41 in prop 42 just to start , both of these were put on the ballot by opponents to the wealth tax. And so what each of them would do is that they would cancel out the wealth tax. And prop 41 would do that by essentially tightening California's tax laws in a way that it would prevent the state from collecting revenue from this wealth tax. And prop 42 would do would do it the same way. It would have the same effect , but is more of a direct rebuttal to the wealth tax. And it would just specifically ban California from taxing people's property and their assets , whether retroactively or in the future. And so if either one of those propositions were to get more support from voters than prop 40 , it would nullify the billionaires tax. Okay.
S1: Okay. And and prop 40 that billionaire's tax. It has really divided the Democratic Party. Here. What kind of responses have you heard or not heard from local leaders here in San Diego?
S2: Yeah , it certainly divided the party a lot. Um , as examples , the state Democratic Party has endorsed prop 40 , as well as , uh , the San Diego County Democratic Party. They've also endorsed prop 40. Yet many of San Diego's own Democratic leaders and state representatives are against it or haven't said anything about it. Um , Senator Katherine Blake Spear , who represents Encinitas , she opposes the wealth tax for similar reasons as as Newsom and Becerra. And , um , you know , with the fear that it would lose over time , it would hurt the state , and also that it's too narrowly focused. Um , and she she has said that she would support , you know , a federal wealth tax to kind of offset some of those concerns about how it would affect California. Meanwhile , Assembly Member Chris Ward , who's also a Democrat and who represents San Diego , he has said that he supports it. And , uh , his reasoning being that he thinks that billionaires , you know , they're not paying their quote unquote fair share and that this is a way to ensure that they do. Um , otherwise , it's been difficult to nail down many lawmakers , including those in San Diego , especially , especially as I found in my reporting , focuses on the state legislature , especially lawmakers in the state legislature , to say what they think of it. Um , but it has certainly driven the party statewide and and locally.
S1: Is it strange to you that that many of our lawmakers aren't taking a public stand on prop 40.
S2: It is strange because it's certainly unusual , given such a high profile , um , measure that it is that many of them have opted out to not say anything about it , given that it's of all the ballot measures , right? This is the most well known for a lot of everyday people. And so it's from experts I've talked to. There's a couple of things happening here. As for why it's driving this rift that we're seeing , and why a lot of Democrats just don't want to sway in at all. And for one , it it's it comes down to ideological and policy questions. Some Democrats just don't think it's a good idea policy wise. Um , such as the reasons I mentioned why Senator Blake Spear and why , um , Governor Gavin Newsom are opposed to it. They think it's just a bad policy. It won't have the benefits that we think it actually will. And then there's also another question as far as the the politics of the measure. While a lot of Democrats do support taxing billionaires , they don't think that this particular measure is the way to go about it. And also because so many of the state's wealthiest residents are against it. It means pitting themselves against people who potentially are campaign donors and help finance their campaigns as well. And so there's several kind of levels of dissent that's happening here from both a policy and a politics standpoint. Hmm.
S1: Hmm. Well , let me ask you about that. Um , the policy standpoint where there's this fear that so many billionaires will will make their exodus from California. Has that happened in the past here or elsewhere? Um , and that you're aware of. What's the big impact been? Right.
S2: Right. Well , it already has happened. And this is something that opponents to this measure will bring up. As an example again , Google co-founder Sergey Brin , he's already moved , um , his company's assets and his residents out of the state in response to prop 40 and , um , as well as other billionaires , too. And he just happens to be the main financier of the opposition to this campaign. But he's the main example. Right. And so this has already happened. And there's a fear that it will just continue to happen should this proposition become law. Hmm.
S1: Hmm. So how would you describe the tone of ads we're seeing right now for and against prop 40?
S2: Yeah , I would say that as far as the no side much of it has Really relied on this kind of a slippery slope argument that is a little bit fear driven about how what the passage of this proposition can mean for everyday middle income Americans and how it could expand , uh , to people's retirements and pensions accounts , for example. We know that this isn't true in the language , the ballot language. It is not the case where , uh , billionaires retirement or pensions accounts would be taxed. But this is something that the opposition has used in this leveraged on as a way to kind of create a sense of fear around the idea of , of the , of the measure passing. And then on the yes side , a lot of the strategy has focused on billionaires , again , not paying their fair share in the state. And the consequence of. millions of low income Californians losing their health care access. Within the next year , and what that could mean for our long term , even for the state's own long term stability as far as funding social services and how there is a sense of urgency of we need to address this , um , impending , as proponents will say , kind of an impending crisis that the state is about to , uh , undergo due to federal funding cuts. Right.
S1: Right. So so what does recent polling say about how likely this measure is to pass prop 40? Yeah.
S2: Yeah. Recent polling has shown that it's pretty close. Um , but in general , support for prop 40 has slid , um , below 50%. And so it right now it's pretty unsettled. But the most recent polling done by the Public Policy Institute of California has shown that the majority of voters as of right now would be against it.
S1: I've been speaking with Nadia Lathan. She covers state politics for Voice of San Diego and Cal Matters , and you can find more information about prop 40 and all the measures on your ballot at the KPBS Voter Hub. Just head to kpbs.org. Nadia , thank you so very much.
S2: Thank you for having me.
S1: That's our show for today. I'm your host , Jade Hindman. Thanks for tuning in to Midday Edition. Be sure to have a great day on purpose , everyone.
