Tuesday’s elections will be pivotal for the progressive movement to tax the rich.
Voters in California will decide whether to implement the nation’s first wealth tax, while three other states will consider ballot measures related to income tax rates for top earners.
If successful, these ballot measures could be a boon for the left’s push to raise taxes on the wealthiest Americans, potentially signalling that a federal wealth tax is a viable policy priority. Even if the measures fail, some advocates are claiming victory for getting the issue on the ballot at all.
“Obviously, we want this to pass, but already the economic credibility of the proposal, the political salience and the popular support for it already is a breakthrough,” said Nabil Ahmed, who is pushing for California’s Proposition 40 as the senior economic and racial justice director at Oxfam America. “It’s also a vindication at the federal level that there’s an economic credibility and a political salience to tax the richest people in this country.”
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Proposition 40 would implement a one-time 5% tax on billionaires’ assets. Ninety percent of the revenue raised would fund health care, with the rest going toward education, food assistance and administering the tax itself.
But there are plenty of opponents — all the way up to Democratic Gov. Gavin Newsom. The potential 2028 presidential candidate endorsed another ballot measure that would effectively ban the proposal.
“I’m voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending,” Newsom wrote in a June Substack post about Proposition 40. “Wealth is movable, and it shops for the state with the lowest taxes. The fight belongs at the federal level, where this broken system was created in the first place.”
Many economists warn the measure could also drive wealthy taxpayers out of state, taking their tax dollars with them.
Billionaires have poured hundreds of millions of dollars into a campaign to defeat Proposition 40. At least six billionaires, including Google co-founders Sergey Brin and Larry Page and venture capitalist and Republican megadonor Peter Thiel, have said they moved out of the state because of the proposed wealth tax.
Even if billionaires don’t flee California en masse in the event of Proposition 40’s passage, economists said the measure could discourage business owners from moving there, depriving the state of new jobs and tax revenue.
“The risk is not just what happens to current taxpayers and do they leave and stop paying individual income taxes or shift their economic activity, but it’s maybe even more so due to the next generation of founders that could drive California’s economy,” said Jared Walczak, a senior fellow at the Tax Foundation.
The tax revenue losses could be more muted than expected, because California’s wealthiest have long weathered high taxes.
“It’s possible that those high-income, high-wealth taxpayers most inclined to leave when confronted with those high taxes [have] already left,” said Robert McClelland, a senior fellow at the Urban-Brookings Tax Policy Center.
California voters also will consider a proposition to make permanent the state’s top marginal income tax rate of 10.3% to 12.3% on individuals earning more than $371,000. Revenue from the tax on those top earners helps fund schools and health care.
Three other states also have ballot measures seeking to change income tax rates on high earners.
North Carolina’s ballot includes a proposal to keep the maximum state income tax rate allowed by the state constitution at 3.5%.
Voters in Colorado will decide between two competing ballot measures — one to cap income taxes at the current rate of 4.4%, the other to establish a rate range of 3.7% to 8.4% to fund education and health care.
An initiative in Washington would repeal a state law placing a 9.9% tax on individual and household income over $1 million. The law is set to take effect in 2028 and would expand funding for schools, health services and a working families tax credit. Washington has no state income tax, but it does have a 6.5% sales tax.
Adam Glickman, secretary-treasurer of Service Employees International Union 775, noted that Washington’s current tax law translates to lower-income workers paying a higher portion of their earnings in sales tax.
Glickman said voters defending the income tax at the polls on Tuesday would send a message across the country that high taxes on the wealthy are politically viable.
“The lesson is that, one, people are willing to increase taxes to pay for critical public services, and two, that people do support increasing taxes particularly on the wealthy who have seen big gains in their income and wealth over the last decade,” he said.
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