Can Silicon Valley’s billionaires stop a California wealth tax?

{"text":[[{"start":7.65,"text":"“They’ll never even notice.” Besides a giant map of California and a “Billionaire Tax Now” poster in his Oakland office, across the bay from the tech riches of San Francisco, union boss Dave Regan is professing surprise at the virulence of the reaction to his plan for America’s first wealth tax."}],[{"start":25.35,"text":"The net worth of California’s billionaires was estimated by Forbes magazine at $700bn in 2019 and $2.1tn at the end of last year, Regan points out. His proposal would levy a one-time 5 per cent tax on that wealth to replace federal healthcare funding stripped from the state by President Donald Trump’s One Big Beautiful Bill. "}],[{"start":47.150000000000006,"text":"“Their portfolio has returned 212 per cent,” he said. “If their portfolio had returned 207 per cent, nobody would notice. It would just be, ‘life is great. This is fabulous. I’m rich as hell.’ I’m sorry that it offends the sensibilities of the wealthiest people on planet Earth, but there are 250 of you and 3.5mn people are going to lose healthcare.”"}],[{"start":null,"text":"

"}],[{"start":70.80000000000001,"text":"It is a calculatedly populist pitch to voters and, after Regan’s healthcare workers union raised enough signatures to get it on the California ballot, it will go to a referendum in what could be among the most consequential votes of November’s elections."}],[{"start":85.4,"text":"In a year where New York mayor Zohran Mamdani’s crowds chant “tax the rich” and democratic socialists are unseating moderate Democrats from Maine to Colorado, the California ballot will test if the public’s pitchfork-wielding mood can be harnessed in a state that is home to more billionaires than any other. Senator Bernie Sanders and even French economists have flown in for the fight, conscious that California has been an incubator for liberal ideas, from clean air standards to higher minimum wages — but also that it foreshadowed Ronald Reagan’s anti-tax backlash in the 1970s."}],[{"start":123.45,"text":"The ballot is also shaping up as a test of the political power and organising muscle of Silicon Valley’s billionaires. Because, ooh boy, have they noticed."}],[{"start":null,"text":""}],[{"start":133.55,"text":"The campaign formally kicks off next week with the publication of official arguments for and against the billionaire tax and related measures. Heavy ad spending will follow in the autumn, but given the expense of simply collecting signatures to get on the ballot, this is already shaping up as one of California’s most expensive referendum battles."}],[{"start":152.8,"text":"Google’s co-founder Sergey Brin has poured $82mn of his $270bn fortune into a new campaign group, Building a Better California, to fight the tax and led a billionaire whipround that topped up its coffers to more than $100mn. Building a Better California successfully raised signatures to get two spoiler proposals on the ballot, either of which would nullify the wealth tax if it got more votes on November 3."}],[{"start":179.70000000000002,"text":"Cryptocurrency entrepreneur Chris Larsen, venture capitalists John Doerr and Michael Moritz and the founders of Stripe, Affirm and DoorDash are among those who wrote seven-figure cheques to the group. Larsen has set up a second outfit to oppose the tax, while he and Google’s former chief executive Eric Schmidt are helping fund Brin’s group and funnelling money into the campaign via the California Business Roundtable."}],[{"start":205.85000000000002,"text":"In all, at least $129mn has been collected directly from billionaires for the fight. Regan’s SEIU-UHW has allocated $30mn but hopes to draw more funds from sympathetic unions and others nationwide."}],[{"start":223.00000000000003,"text":"“It’s going to be a very bloody fight,” Moritz predicted, but one he hoped would tip the scales against union interests that he said dominated California politics."}],[{"start":null,"text":""}],[{"start":233.00000000000003,"text":"“The public sector unions have an enormous fundraising advantage. With member fees, they know what their revenues are going to be in 2027,” he told the FT. On the other side, “everyone has to scramble. Every time, business interests have to start with no money in the coffers. What would have happened if Sergey hadn’t stepped up? It’s the first time he’s ever participated. It depends on not very many people. The political giving is very concentrated. It’s much more fragile than it seems from the outside.”"}],[{"start":263.45000000000005,"text":"Moritz said it would be “calamitous” if the billionaire tax were to pass, coming on top of California’s already high income and business taxes and heavy regulation. "}],[{"start":274.40000000000003,"text":"“There are serious consequences of the state being hostile to business and to people who have been successful, and the results are obvious. Companies have moved with their wheels and individuals have moved with their feet,” Moritz said. Elon Musk relocated Tesla to Texas and Oracle founder Larry Ellison had left California even before the suggestion of a wealth tax last year caused more billionaires to flee. "}],[{"start":298.45000000000005,"text":"Brin’s has been a fight and flight response. He is among several people who left the state before January 1 this year, the retroactive date on which wealth tax would be levied on billionaire residents. He lists his residence as Nevada in campaign finance filings, having reportedly transferred business assets out of California and bought a house on the opposite side of Lake Tahoe."}],[{"start":320.30000000000007,"text":"His Google co-founder Larry Page and investor Peter Thiel are among others who appear to have moved their primary residence before the deadline, reports seized on by opponents of the billionaire tax to argue it will be self-defeating. Uber co-founder Travis Kalanick told an interviewer he relocated to Texas on December 18, and last month he posted video of his “5 minute jet ski to work” across Lake Austin."}],[{"start":345.9000000000001,"text":"“These golden geese have wings,” said David Lesperance, a wealth adviser to the ultra-rich who advised non-doms on relocating from the UK after tax changes there. He says he has helped seven billionaires leave California since the tax proposal became public. "}],[{"start":363.6500000000001,"text":"This is the concern that has opened up a bitter rift in the Democratic establishment in otherwise deep-blue California. Governor Gavin Newsom tried unsuccessfully to persuade the SEIU-UHW to drop its proposal, saying a “California-only wealth tax” would drive the rich away. He found allies in other California unions who were upset the proceeds of the proposed billionaire tax would be earmarked only for healthcare. The left’s disunity is a reason betting markets give the tax a less than one in three shot at passing."}],[{"start":393.80000000000007,"text":"How vigorously the governor and other unions will fight alongside the billionaires remains to be seen. With an eye on the Democratic race for the 2028 presidential nomination, Newsom argues instead for federal measures to tax billionaires."}],[{"start":409.9000000000001,"text":"Brin did not respond to a request for comment for this article, but in April told The New York Times: “I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don’t want California to end up in the same place.”"}],[{"start":null,"text":""}],[{"start":426.1000000000001,"text":"The tax would be a real-world test of proposals long advocated by a group of French economists whose most famous member, Thomas Piketty, had a bestseller in the US after the financial crisis with Capital in the Twenty-First Century, which argued historically large concentrations of wealth were leading to economic instability."}],[{"start":446.7000000000001,"text":"Piketty’s longtime collaborators Emmanuel Saez and Gabriel Zucman, who split their time between Paris and the University of California Berkeley, have been working with the SEIU, simplifying economic arguments for the campaign blitz and going toe to toe with rival academics over the potential downside of billionaires leaving (negligible, they say)."}],[{"start":466.6500000000001,"text":"Regan first encountered Saez in 2025 and was impressed with his arguments for a wealth tax. After SEIU pressure on California’s members of Congress failed to halt the passage of the Big Beautiful Bill in Washington last July, the union boss asked to see him again."}],[{"start":null,"text":""}],[{"start":483.6000000000001,"text":"“I made him come to my office, actually, because I thought this is pie in the sky,” Saez recalled over espressos at the Berkeley economics department. Saez joined a group debating long-shot tax-raising measures to make up for the federal funding cuts. Ideas included reforming capital gains levies and wealth taxes on a broad swath of rich Californians — akin to proposals that had quickly died in the state legislature before."}],[{"start":510.1000000000001,"text":"“The decision specifically to target billionaires came a little bit later. But this is where the rise in wealth concentration has been the most striking, and there’s now a ton of revenue there, so we realised we’d have something manageable — not too many taxpayers, the tax administration here can handle that — and the debate will be ‘billionaires versus healthcare’,” Saez said."}],[{"start":529.8000000000001,"text":"“It’s a flashy thing. Easily understood. That combination made it irresistible.”"}],[{"start":535.85,"text":"Zucman is excited by the fight. “It could be the first step — it is not going to be enough, but the first step — to say we are going to organise to put a limit to the oligarchic drift happening in this country.” "}],[{"start":null,"text":""}],[{"start":547.15,"text":"Opponents have noted the involvement of these naturalised Americans. “The billionaire tax proposal is written by four professors who don’t believe in the American dream,” the investor Chamath Palihapitiya wrote on X. “Some of them aren’t even American . . . go figure.”"}],[{"start":562.1,"text":"Such opponents have megaphones as well as money. Palihapitiya and his co-hosts on the All-In podcast have railed against the billionaire tax repeatedly since it was proposed last October. Palihapitiya has called the proposal an “everyone tax”, arguing the legislature will eventually repeat the tax and extend it to less wealthy Californians. David Friedberg, another venture capitalist and All-In host, said the state was giving government the power “for the first time ever to come in and audit everything you own, all the jewellery your grandma gave you, the value of all the couches in your house, the value of your car, the value of your stocks and bonds”."}],[{"start":602.15,"text":"The billionaire tax’s fate may depend on how keenly that fear is felt by ordinary voters — or how keenly Building a Better California’s money can make that fear be felt. Potentially the most potent of the spoiler ballot measures would “prohibit taxes of retirement holdings and personal savings”, preventing California from imposing a wealth tax on even the richest sliver of the population."}],[{"start":625.8,"text":"The campaign’s polling suggests 76 per cent could support such a prohibition when it is described as protecting retirement savings. Surveys put the billionaire tax on about 55 per cent support. If both pass, the one with the higher vote share wins."}],[{"start":642.5999999999999,"text":"Much might also come down to whether more high-profile entrepreneurs leave the state, or whether the mini-exodus slows. Palihapitiya told CNBC this week that he would remain in California. “It’s given me everything so I will not leave. I will keep building companies there and hiring people there and if there are taxes that I have to pay I’ll pay these taxes,” he said, even as he predicted the money would be wasted."}],[{"start":667.2499999999999,"text":"“You wanna take a piece of flesh, fine, take it. But there’s a lot of us that will follow those dollars like Inspector Clouseau with a microscope.”"}],[{"start":null,"text":""}],[{"start":676.4999999999999,"text":"Others in the US and around the world will also be watching to see how Californians react to the prospect of their state imposing a first-of-its-kind tax. "}],[{"start":686.0499999999998,"text":"Moritz said that “if I were successful and in my forties I would be thinking pretty hard” about leaving (he is 71), for fear that this one-time levy is the start, not the end, of the matter."}],[{"start":698.5499999999998,"text":"“Have you ever heard of a one-time tax?” he said."}],[{"start":701.2999999999998,"text":"“On this one we actually agree with our opponents,” Saez told the FT. “If this thing happens, it’s true that it makes it much more likely that such ultra-rich wealth taxes will happen again, some of them permanent, perhaps at the federal level, perhaps in other states, perhaps later in California."}],[{"start":720.8499999999998,"text":"“So it makes sense that they’d be against. We welcome that fight. It’s a fair fight. That’s the first step to fight back against billionaires.”"}],[{"start":736.4499999999998,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1784201624_3528.mp3"}