Andre m / Wikimedia Commons / CC BY-SA 3.0
SACRAMENTO, Calif. – CBS News projected Monday evening that California voters rejected Proposition 40, a proposed one-time 5% tax on billionaire wealth, turning back a levy that would have reached assets rather than just income.
The CBS News projection, published at 6:45 p.m. Pacific time, adds a new result call to a closely watched tax fight involving some of the country’s most prominent technology founders and investors.
The measure would have taxed California residents with a net worth of $1 billion, excluding real estate and certain retirement assets, according to CBS. Its defeat means that proposed one-time charge will not take effect through Proposition 40.
The distinction between wealth and income was central to the business stakes. Supporters argued that large gains in stock prices and private-company valuations can build billionaire fortunes without producing taxable income until those gains are realized. The proposal sought to reach that accumulated wealth directly.
Google co-founders Sergey Brin and Larry Page were among the wealthy opponents identified by CBS, alongside investors John Doerr, Peter Thiel and Vinod Khosla and Stripe chief executive Patrick Collison. Nvidia chief executive Jensen Huang supported the measure.
Opponents argued that a California-only wealth tax would encourage wealthy residents to move and weaken the state’s longer-term tax base. Supporters said the additional funding was needed to protect healthcare programs and other public services. Those were competing claims in the campaign, not findings established by Monday’s projection.
The proposed allocation directed 90% of the money toward healthcare, with the remainder for education, food assistance and administering the tax, CBS reported. Rejection leaves those programs without the new funding mechanism proposed in the initiative.
The projection does not establish whether wealthy residents who have left California will return, whether others will abandon relocation plans, or how investment decisions will change. It settles the fate of this proposed levy, not those broader business choices.
JBizNews previously covered the tax fight and concerns over billionaire departures. Monday evening’s development is the fresh CBS News projection on Proposition 40.
JBizNews Desk | Sacramento, Calif.
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