California voters weigh 5% billionaire tax as revenue estimates split

The money fight: Backers led by SEIU, which CNBC says has spent about $32 million for the yes side, say the tax would raise about $100 billion, a figure they say already allows for 10% avoidance. A Hoover Institution study by economist Joshua Rauh estimated it would collect about $40 billion and, once lost income-tax revenue from departing billionaires is counted, leave the state about $25 billion worse off. The Wall Street Journal's editorial board cited that work in calling the tax a "boomerang." Building a Better California, the no campaign whose top donors include Brin, has spent about $118 million, CNBC reports, citing state filings.

What the evidence shows: The state's own analysts don't back either headline number. The LAO says the state "probably would collect tens of billions of dollars" spread over several years, calls the total "very hard to predict," and estimates the ongoing income-tax loss from billionaires leaving at "less than $1 billion per year." That is well below the backers' $100 billion claim, and it also cuts against Hoover's finding of a large net loss, which rests on assumptions about how many billionaires move. Berkeley economist Alan Auerbach told CNBC the range of plausible outcomes is wide enough that the net effect could be negative.

From the document: The official ballot label reads: "Temporary revenue increase of tens of billions of dollars spread over several years from wealth tax on billionaires. Possible ongoing decrease of less than $1 billion per year in income tax revenue from billionaires." The LAO adds that taxpayers could spread payments over five years "but would have to pay more to do so."

Strongest case for yes: Supporters, including Sen. Bernie Sanders and businessman Tom Steyer, argue that a small share of the state's richest residents can cover health care costs as federal funding tightens. "It is a one-time tax for a one-time emergency," UC Davis law professor Darien Shanske, who helped draft it, told CNBC.

Strongest case for no: Opponents, including Gov. Gavin Newsom and Democratic candidate for governor Xavier Becerra, say it will drive out the taxpayers who fund much of the state budget. "This is not the way to do tax policy," Becerra said, per CNBC. Critics also note nothing stops a future measure from imposing it again, a point Auerbach raised.

Where voters stand: Polls disagree. Berkeley's IGS poll in September had yes at 45% and no at 42%, down from 52% to 33% in March, CNBC reports, while a Mason-Dixon poll for NBCUniversal and Telemundo showed yes ahead by 10 points. A Nestpoint poll released Oct. 22 found 54.6% opposed and 34.1% in favor. Prediction markets Kalshi and Polymarket put the odds of passage below 30%, CNBC reports.

What's still unknown: How many billionaires have already left, and whether moves after Jan. 1 would hold up, will likely be fought in court. The LAO also notes that Propositions 41 and 42 on the same ballot could cancel parts of Prop 40 if they get more yes votes.

Sourcing: the Legislative Analyst's Office ballot analysis and the California Secretary of State (primary documents); the Wall Street Journal editorial board and the Hoover Institution (right-leaning); CNBC and the BBC; and a Nestpoint poll release. Quotes are as reported by CNBC and the BBC or taken from the LAO document. Campaign spending figures are as reported by CNBC from state filings. Revenue figures are estimates from the named groups, not settled numbers. Photos are file images.