Proposition 40 promised to generate approximately $100 billion over five years by slapping a one-time 5% tax on California's billionaires. The money would fund K-12 education, Medi-Cal, and CalFresh — three programs that poll like puppies and sunshine in the Golden State. On November 4, 3,966,849 California voters looked at all of that and said no.
That's 52.4% of the vote. In California.
This is a state that went overwhelmingly for Democrats up and down the ballot on the same night. The same electorate that rejected Prop 40 also passed Prop 1 with 59.4% of the vote — 4,506,588 in favor — along with Prop 2 at 59.6% and Prop 3 at 58.7%. Bond measures sailed through. Democrats cleaned up. And yet the billionaire tax, the progressive movement's flagship economic proposal, couldn't break 48%.
Susan Shelley, Vice President of Communications for the Howard Jarvis Taxpayers Association, told The Center Square the result was no surprise to anyone paying attention. "We opposed the billionaire tax. We oppose wealth taxes in general," Shelley said. "It's a new kind of tax for California that we think would definitely grow to encompass more people. We were grateful to see that it was defeated."
That phrase — "grow to encompass more people" — is the whole ballgame. California voters have been down this road. The state income tax was supposed to hit only the wealthy. The vehicle registration fees were supposed to be temporary. Every new tax category starts narrow and expands. Prop 40's backers pitched a tax on billionaires. Voters heard a tax on billionaires first.
Bob Kaplan, a Senior Scholar at Stanford University School of Medicine's Clinical Excellence Research Center who supported the measure, conceded the loss gracefully. "I was very proud of our campaign. We are disappointed, of course, that we just didn't have the funds to get the message out," Kaplan said.
The rejection landed alongside another result the national media quietly ignored: Prop 39, a voter ID measure, failed 58.6% to 41.4%. Prop 44 was rejected by a staggering 81.8%. California voters were in a selective mood — willing to approve spending through bond measures like Prop 37, which passed with 61%, but unwilling to create new tax categories that could metastasize.
The progressive theory of economics assumes that if you frame a tax as targeting only the ultra-rich, the non-ultra-rich will rubber-stamp it out of spite or solidarity. California just stress-tested that theory with almost eight million ballots cast on Prop 40 alone. The spite wasn't there. The solidarity wasn't there. What was there was 52.4% of voters in the bluest major state in America deciding that a wealth tax is a wealth tax, regardless of whose wealth it starts with.
3,966,849 Californians voted against a tax that wouldn't have touched their bank accounts. The progressive pricing model — "don't worry, it's not YOUR money" — has a ceiling. Turns out it's lower than California.
