For the architects of the billionaire tax on the ballot in California this week, the strategy was supposed to be relatively straightforward. First, harness widespread frustration with wealth inequality to pass what supporters believed would be an overwhelmingly popular ballot initiative. Then use California as an example to the country that a tax on wealth could work, propelling the idea into the mainstream and eventually into federal law.
That vision could still come to partial fruition if Proposition 40 passes. But the path through California to a federal wealth tax, a progressive dream for years, now looks like it could be circuitous, if not a dead end. Polls have shown limited support for Proposition 40, which would charge a one-time, 5 percent tax on the wealth of Californians worth more than $1.1 billion. Some recent surveys suggest the measure may even fail. Billionaires have blanketed the state's airwaves with ads claiming the tax could expand to apply to everyone. Democrats and labor unions are divided, and groups representing teachers, doctors and firefighters warn it could harm the state budget if it drives entrepreneurs away.
Regardless of the Nov. 3 outcome, both proponents and opponents agree the stakes reach well beyond California. The once-radical concept of taxing wealth may soon gain a foothold in the nation's most populous state, or it may suffer a surprising setback at the ballot box. "The whole country is watching what you are doing here," Senator Bernie Sanders, a Vermont independent, told supporters in California last month.
For decades, the United States has relied on income taxes to fund federal and state governments. Gains on stocks and bonds are generally taxed only when assets are sold. As the richest Americans' portfolios have soared, progressive policymakers have sought to tax assets before they are sold. During the 2020 Democratic primary, Mr. Sanders and Senator Elizabeth Warren of Massachusetts made wealth taxes central to their platforms, and President Joseph R. Biden Jr. endorsed a plan taxing unrealized gains. Donors pushed Vice President Kamala Harris to drop that plan after she took over the ticket in 2024.
Passage of Proposition 40, especially by a healthy margin, could make a wealth tax more palatable to Democrats in the next presidential primary. A loss or narrow victory could have the opposite effect. An internal document from opponents said it seeks to "chill wealth tax efforts nationally." Representative Ro Khanna of California has campaigned for the tax, while Gov. Gavin Newsom has opposed it.
Source: New York Times Top Stories · Summarized by HeadlinesBriefing