Will California’s billionaire tax actually make it to the ballot?

from Dan WaltersCalMatters

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Early 20th century political reformers like Hiram Johnson saw initiative process — putting measures on the ballot for voters to decide — as an antidote to a legislature controlled by moneyed interests.

However, 125 years after voters passed the process, it has come full circle. More often than not, the initiatives become an arena in which financial interests vie for pieces of California’s vast wealth.

Drafting, qualifying and campaigning for an initiative – or opposing one – can cost tens of millions of dollars, making the process an industry unto itself.

The a battle for half a billion dollars in 2022 between Indian tribes that own casinos and online gaming companies over control of sports betting is a case in point. Both competing measures were defeated, but the clash underscored the underlying financial dynamic: While millions of dollars can be spent on initiative campaigns, the stakes can cost billions. So, ignoring its civic aspects, investing in electoral measures makes perfect sense from a cost-benefit perspective.

The upcoming November election will have a set of money-focused ballot measures clustered around one question: Who should be taxed to fund public services in California, and how much should they pay?

Those who want a tax increase — primarily the unions of the employees who provide the services — are pitted against those who believe California already taxes enough or even too much.

The central element is a measure written by SEIU-United Health Workers Westwhich represents those working in the health sector. it will impose a tax of 5%. on the personal wealth of about 200 billionaires in the state.

This drew the ire of those who would be taxed. A few have escaped California openly to avoid its potential impact and there may be others who have quietly changed addresses. They have also formed organizations to oppose the passage and qualify the measures as poison pills to counter the effects of the wealth tax, as The San Francisco Standard reported this week.

Gov. Gavin Newsom is the most prominent opponent of the wealth tax, and he’s trying to do it bulldozed SEIU-UHW leaders to remove the measure from the ballot before it is locked. The deadline is only a week away.

Newsom has assembled a coalition of opponents, including other unions that are unhappy that 90 percent of wealth tax revenue — perhaps as much as $100 billion — will go to health care, with relatively small amounts for education and food aid.

Newsom and other opponents argue that the wealth tax would trigger an exodus of wealthy Californians, whose income taxes are the backbone of the state’s budget revenue, if they thought their estates could be taxed as well. That argument is bolstered by provisions in the measure that would allow the Legislature to amend the tax if the amendment is “consistent with and furthers the objectives of the Billionaire Tax Act of 2026.”

The measure defines its goal as “protecting access to high-quality, equitable health care and helping fund kindergarten through public education and fourteenth-grade food assistance programs by raising revenue from a one-time tax on the wealth of billionaires.”

Those passages could authorize the Legislature to expand the tax or extend it to lower levels of wealth, depending on how courts might define “targets.”

There is historical reason to believe that, if passed, the wealth tax would not be a one-time charge. In 2012, voters passed a “temporary” additional income tax on the state’s wealthiest residents. Four years later, public employee unions sponsored a measure to extend it to 2030. This year, they another measure to make it permanent.

Once a new tax is introduced, those who benefit from it are motivated to keep it as long as possible.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.