California’s 'carpet-bombed' Wealth Tax Measure Runs Into A Wall

SACRAMENTO, California — At a moment when populist candidates and anti-billionaire sentiment are surging nationally, a campaign to tax the assets of California's billionaires is faltering.

Opponents are hammering the airwaves with ads portraying the tax as an economic wrecking ball, and the measure’s poll numbers have steadily eroded. Multiple surveys last month found it drawing only a narrow plurality, with support in the mid-40s — a warning sign for a campaign that needs to expand its coalition.

Ballot initiative veteran Chris Lehman pointed to one telling shift: Independents now oppose the wealth tax while supporting a separate tax measure for public schools. That, he said, “should’ve rang every alarm bell on Earth.”

“The trendlines from the polling I've seen are all looking bad for the yes side,” said Lehman, who is not working for either campaign. “They’re all looking good for the no side.”

A labor union’s proposal to offset federal health care cuts with a one-time, 5% tax on the state’s fewer than 300 billionaires has convulsed California politics from the moment it was filed late last year. Now, as ballots are hitting voters’ mailboxes, Proposition 40’s supporters are getting knocked back by powerful headwinds — including an opposition alliance comprising some of the state’s most powerful political players and richest residents.

Google co-founder Sergey Brin and a group of enormously wealthy Californians have poured more than $200 million into halting the tax, spending against Prop 40 as well as by boosting two countermeasures that would invalidate it. Gov. Gavin Newsom has denounced the tax for months, warning it will harm California’s economy and drive taxpayers out of state, as have powerful Democratic allies like Planned Parenthood, labor unions, and the state’s likely next governor, Xavier Becerra.

Proponents never expected to match their billionaire foes’ spending. But they don’t have the money to run more than a token amount of television advertising, ceding the airwaves to their opponents and relying on a labor-powered turnout apparatus that does not include ground-game heavyweights like the California Teachers Association, which opposes the measure, and SEIU California, which is neutral.

Communicating with voters through ad campaigns costs tens of millions of dollars at a minimum in California, whose 23 million voters are fragmented across multiple media markets and a vast geography. The campaign’s single-biggest donor beyond its sponsoring health care union SEIU-UHW — whose money went largely to gathering the signatures necessary to qualify the measure, with another $2 million advertising infusion planned — is Saikat Chakrabarti, a former tech worker who gave $201,000.

“It’s terrible that basically no other rich people are putting in money,” Chakrabarti, a former Rep. Alexandria Ocasio-Cortez aide who ran unsuccessfully for Congress this year, said in an interview. “How does that make me the second-biggest donor to a statewide proposition? That’s wild.”

The measure is widely seen as a test of whether a wealth tax can gain traction in the U.S. Supporters argue a victory in California would spur similar efforts elsewhere, while a defeat in this deeply Democratic state could sap the political will to try again.

"Prop 40 is going to end up being this real test case of whether wealth taxes can work as a political issue," Chakrabarti said. If it fails, he added, "that’s going to scare politicians away from it."

Even if the campaign defies the odds and wins, it has another hurdle: Prop 40 needs to prevail by a wider margin than either of the two billionaire-funded countermeasures that would invalidate it — one to audit state spending and the other to bar taxes on assets like stocks.

Supporters can point to signs of momentum. They have picked up vital endorsements from the California Democratic Party and the California Labor Federation, which puts them on party mailers and gives them access to the labor group’s organizing operation, and Sen. Bernie Sanders energized crowds in San Francisco and Los Angeles this month. They say they have recruited thousands of volunteer “captains” to spread the word.

Backers argue it’s a sign of the measure’s inherent appeal that it is still narrowly ahead in multiple polls despite the opposition blitz, and point to data showing undecided voters are inclined to vote yes.

“We are going to get carpet-bombed. There’s no question about it. But I think there’s a lot of energy,” said SEIU-UHW President Dave Regan. “We actually feel very good about where we're at.”

Despite opposition from some unions — which argue the tax is narrowly designed to benefit its sponsor and will ultimately cost California vital revenue — other segments of organized labor are moving toward the tax: United Teachers Los Angeles broke with the California Teachers Association to endorse it, and the California Federation of Teachers recently announced its support.

United Teachers Los Angeles Vice President Julie Van Winkle said members felt compelled to back the only measure on the ballot that seeks to restore health care cuts, even as she conceded "the odds are against us."

“If I'm a quarterback and there’s a couple of seconds left in a game, I'm going to throw a Hail Mary instead of downing the ball. Prop 40 is our Hail Mary,” Van Winkle said. “We don't have hundreds of millions of dollars to put into a campaign. We just have people talking to each other.”

Those supporters have come on board despite a recently surfaced internal union investigation that substantiated allegations against Regan of intimidation and assault. Regan denies those accusations. And he has pressed on. At the recent Sanders rally, Rep. Ro Khanna lauded him from the stage for “defying the odds.”

“This is not about me,” Regan said in an interview outside the event. “Nobody knows who I am. This is about: Do we want to watch our health system collapse or not?”

Polls show Prop 40 faces a tough path to victory — but also that voters, particularly younger Democrats, believe a fundamentally unfair economy has let billionaires accrue too much wealth and power.

“It’s winnable if you got some kind of super-charged turnout that would skew left,” said Rob Stutzman, a longtime Republican consultant in California who is not working for either side of the measure. “Turnout’s got to be a lot younger, probably, than most midterms. But count me as very skeptical.”

Tax the Greedy Billionaires founder Alan Davis, who has funded a complementary effort to pass Prop 40, described the lopsided campaign as a test of whether the intrinsic appeal of taxing billionaires can overcome the forces arrayed against it.

“We don't have the resources to come anywhere near what’s being spent by the opposition, but we have the right message and the public is on our side,” Davis said. "It’s a guerilla warfare type of approach."