Prop. 40 (One-Time Wealth Tax on Billionaires): No
The division of wealth throughout the United States has grown morally grotesque. Under the Trump administration, it’s become pornographic. Due to the president’s “Big Beautiful Budget Bill,” one trillion dollars will be cut from the safety net from the nation’s poor in order to bestow $1 trillion in tax breaks to the upper one percent.
Prop. 40 is an attempt to buffer this cruel reality by promising to offset the billions in Medicaid cuts with billions generated by a one-time wealth tax on the 220 billionaires calling California home, four of whom reportedly live here in Santa Barbara. How could anyone resist such karmic comeuppance?
Sadly, at its best, Prop 40 is a rhetorical gimmick that can’t possibly deliver on its promises. But it will make a bad situation even worse by creating a completely new category of taxation: a one-time tax of 5 percent on the wealth — not the income — of state billionaires.
Wealth includes all kinds of things that don’t qualify as income: yachts, jets, art and wine collections, business interests, stocks, grand pianos, football teams. However, California’s vast tax-collecting bureaucracy is structured specifically to tax income, not wealth. Incredibly, the fine print of Prop. 40 allows the government only six months to create this new wealth-assessing system.
We are struck by how often the words “maybe” and “probably” show up in the fine print. How much money might actually be raised? How many billionaires might flee the state? How much might state income tax revenues drop? Since California relies upon income taxes — as opposed to real estate assessments — those are threatening questions.
Eventually, some thorny details might get hammered out, but the wheels of government turn even slower than those of justice: A six-month deadline is a practical impossibility; worse, efforts to meet it will generate more litigation than revenue. Little wonder that organizations such as Planned Parenthood and the California Medical Association — which would presumably benefit from Prop. 40 — have come out against the measure.
Of course, the billionaires, presumably terrified of becoming wealth-tax refugees, have raised $200 million to stop the measure. Yes, it’s a gross spectacle. But if the devil is in the details, then Prop. 40 needs an exorcist.