Out here in California, Democracy is a monthslong slog. The state effectively began engaging in big-D Democracy sometime around January—that’s when California’s ballot measures were gathering signatures. Every time you went to Ralphs or Vons, you could linger outside in the perpetual sunshine, pick up a box of Girl Scout cookies—and scribble your signature onto the latest ballot initiative.
The people gathering those signatures are often gig workers, paid for each John Hancock they wrangle. They carry around armfuls of paper (usually collecting signatures for four or five ballot initiatives at once), and they’ve learned to lead with the most popular measures. A Californian hurrying through a milk run won’t always stop when asked to sign your petition to create an immunology research institute at the state university, but they might stop if you ask them to sign on to an easy-to-explain and broadly popular initiative like Voter ID or Prohibiting New Retirement Taxes. Their ears may especially perk up when they hear the signature hustlers mention this year’s billionaire tax.
“Have you signed the billionaire tax yet?” was a popular refrain outside my local Ralphs. They’d buttonhole you with that or with the ballot measure prohibiting new retirement taxes, which sounded just as simple until you asked to see the language. I remember reading the retirement tax initiative and feeling uncomfortable; it was too wishy-washy. What’s this here about prohibiting new taxes on the worldwide value of my intellectual property? Are California’s firefighters and nurses really at risk of retroactive taxes on the future value of their 401(k)? I had the curious sensation that I was being astroturfed. Turns out, I was.
The Retirement and Personal Savings Protection Act is one of six billionaire-backed measures, three of which are aimed at defanging the billionaire tax. All these measures are funded by Building a Better California, the $80 million nonprofit bankrolled by Google founder Sergey Brin, who has thrown a $40 million tantrum over the notion that he may have to pay the billionaire tax. A spokesperson for Building a Better California didn’t want to speak on the record, but Brin’s been telling the governor and every reporter who’ll listen that he’s leaving California and taking his toys with him. Why, he’s even threatening to move the company that manages his 466-foot-long superyacht out of the Golden State, per The New York Times.
There’s a dystopian (and distinctly American) paradigm on display here, a scene akin to performance art: Gig workers sweating outside grocery stores, collecting signatures to keep billionaires from paying taxes. Those same billionaires insist they’d rather leave than pitch in to help keep afloat the system within which they built their empires. Sergey Brin built Google while on a taxpayer-funded grant from the National Science Foundation. Those grants, of course, have been slashed in the Trump era. Now that Brin has reached the top, he’s pulling the rope up after him, throwing his hissy fit from a ritzy hideaway somewhere in Nevada, presumably Lake Tahoe. But chances are—unless his ballot initiatives pass and/or he wins the lawsuits that will inevitably follow—Brin is going to have to pay the billionaire tax. (Who knows how much, but you might ballpark it at about 15 of his $240 billion.)
“If it were so easy just to get a Nevada driver’s license or put your assets in the Cayman Islands, would the billionaires be this agitated?” asks Darien Shanske, the UC Davis tax law professor who helped write this year’s billionaire tax. Shanske told The New Republic that he began working on a wealth tax during the pandemic in 2020, but that it became an emergency after Trump’s Big Beautiful Bill cut nearly $1 trillion from health care assistance to low-income families, driving a hole into California’s budget. It’s no coincidence, he notes, that the billionaire tax’s signature-gathering effort is funded by the health care workers’ union, SEIU-UHW.
Shanske was recruited into the effort by David Gamage, a University of Missouri tax law professor who advised Senator Elizabeth Warren on her wealth tax policy when she was running for president. Gamage says that he, Shanske, and two other law professors—Brian Galle and Emmanuel Saez, both of UC Berkley—worked on “several rounds of wealth tax proposals.” At first, it seemed like the California Teachers Association might put the billionaire tax on the ballot, but when that fell through SEIU-UHW picked it up.
The Teachers Association is now backing a permanent structuring of Proposition 30—the 2012 referendum taxing high earners that has pumped nearly $100 billion into the state’s education system—so, technically, there are two wealth taxes jockeying for the ballot this year in California. This has obviously set off a bout of inter-labor bickering, which is destined to resolve by late June when the ballot measures are finalized.
The fact that most people are unaware of the dual wealth taxes, that most people are only talking about the billionaire tax, is a testament to Brin & Co.’s relentless media campaign. But, back in 2012, Proposition 30 generated many of the same talking points we’re now enduring—scattered anecdotes dressed up as actual data points. Fox News crowed that Phil Mickelson was leaving California. The Daily Caller declared, “Millions flee California because of progressive tax system.” The Wall Street Journal even took a victory lap in 2019 after one Stanford study found that California’s high-earner emigration reached nearly 0.8 percent after Proposition 30. Fox Business said the less-than-1-percent figure constituted a “mass wealth exodus.”
But Chris Hoene, director of the nonpartisan California Budget Policy Center, told The New Republic that the Stanford study “couldn’t determine if [the tax emigration] was related to tax policy or if it was something else.” In fact, the study’s authors made exactly such an admission in their conclusion, and wrote that blaming high-earner emigration on tax policy would be a “naive interpretation.” Though this is a surprisingly understudied area, Hoene noted that another Stanford study “found that the only instances where people move out of the state amidst increases in tax policy happen because of people retiring … or because of divorce.”
Shanske says their research indicates “if the tax is at a low rate then wealthy people will pay it, unless it’s very easy to avoid.” But the American taxman is famously clumsy around the ultrawealthy. Gamage argues that “over the last 60 years or so, legislatures in the U.S. at the federal and state levels have allowed the tax system to be easily escapable.” That weakness extends to California, where Governor Gavin Newsom (who is opposing the billionaire tax) continuously touts the state’s progressive tax structure.
Newsom’s critics on the right are quick to point out that California is home to the nation’s highest income tax rate (13.3 percent for top earners), but, according to Shanske, the state’s income tax “doesn’t really touch the great fortunes because they don’t actually earn income.… They might get a little bit of money, but the idea that they have trillions of assets and that, somehow, their contribution to the income tax base is proportional to that—that is fundamentally false and fundamentally what [the billionaire tax] is about addressing.”
The academics, understandably, bristle at criticisms like those from Newsom, who has complained that the billionaire tax is “badly drafted.” The law professors stress that they’ve been working on this for years. “This is not something on the back of a cocktail napkin,” says Shanske. They published their model for evaluating extreme wealth (they call it the ULTRA model, short for unliquidated tax reserve accounts) back in 2023, in the Duke Law Journal.
The ULTRA model solves a famously sticky problem: evaluating billionaires’ nonpublic assets. Though, in all likelihood, those nonpublic assets account for only a small slice of billionaire wealth, Shanske points out that “most assets of most billionaires are public and easy to value,” adding that “the idea that we shouldn’t tax something that’s most of the tax base and that’s easy to value, that just doesn’t make a lot of sense.” And putting a dollar sign onto large private companies isn’t the unsolvable riddle critics make it out to be. “There’s a whole industry of appraisers,” he says. “When you want to buy into some private company, and you have a billion dollars to invest, you need to know what share of the company you can get.”
Almost all the well-reasoned criticisms of the billionaire tax center around these fine points of valuation and are debated in the jargon of tax lawyers, economists, and anti-tax think-tank directors. But the most salient issue is illustrated by billionaire founders like Brin and Mark Zuckerberg, both of whom control minority shares in their (publicly traded) companies but have majority voting rights. There is, theoretically, a way to read the billionaire tax as taxing Brin and Zuckerberg on their corporate voting rights. But Gamage says this is a misreading; that the extra voting rights “do not affect the tax beyond the extent to which they might affect the market trading price” of the billionaires’ publicly traded shares.
And any billionaire unhappy with his valuation can submit an appraisal. Gamage told The New Republic that “for someone who has complicated assets, for whom the formulas don’t work, the Act very clearly says an appraisal can be submitted, and this is a familiar process in the U.S. estate and gift tax.”
According to the authors, the billionaire tax is projected to raise $100 billion over five years. This money will go into a special fund, 90 percent of it going to health care, specifically “health coverage programs for low and moderate income individuals.” Ten percent goes to education and food assistance. Because of a decades-old voter proposition, California’s spending is strictly limited to 1979 levels, adjusted for inflation and population changes. Newsom balances that spending out of a general fund. Most of the general fund is raised by income tax, some is raised by sales and corporate taxes; about half of the general fund goes to education, according to Hoene of the California Budget Policy Center. One of Brin’s ballot initiatives—which is astroturfed as a so-called “transparency campaign”—would lump the billionaire tax in with the general fund, thus refunding a sizable portion. All the ballot initiatives have boilerplate language dictating that the ballot measure with the most votes is the one that becomes effective.
“Our measure is on the ballot. If reasonable people don’t want to vote for it, they don’t have to vote for it. It’s on the ballot, and that’s the whole point,” says Shanske. “The whole point of [Brin’s ballot measures] is to trick somebody who votes for the billionaire tax to vote also for these, and I should say that these things are sloppily drafted. If they both pass, there’s gonna be a big fight … but what they’re attempting is deceptive and full of contempt for voters.”
The California voter is largely a reasonable creature—but he’s not a tax lawyer. He’s a lot like the signature gatherer outside my local Ralphs who just couldn’t understand why I couldn’t understand the retirement tax initiative he was trying to get my name onto. After a minute of trying to sell me on it, he gave this big sigh, shuffled his petitions, and handed me the next ballot measure in his stack. My kid was screaming in the cart, and I was brain-fried at the end of a long day. I honestly don’t know if I signed the next one or not. I guess that’s kind of the point.
