Why Even Some Democrats Hate California’s Billionaire Tax Proposal

From The New York Times, I'm Natalie. [music] Kitroeff. This is The Daily. Starting right here in California. These billionaires are going to learn. that we are still living in a democratic. [music] society where the people have. some power. A landmark proposal for a one-time tax. on [music] billionaires in California. reached a milestone this week.

It got enough signatures [music] to put. the measure to a vote. Those who have prospered from here in. California can afford to invest a little. more in keeping [music] California. running. Proponents say it's necessary. to right the wrongs of an unequal. [music] system. It's like the Democrats. are doing everything they can to get me. to leave the state. I don't want to. >> [laughter]. >> Opponents say it's going to drive rich. taxpayers out of the [music] state. >> It's an idiotic concept that is nothing.

more than than political positioning. But it's not [music] just Republicans. and the ultra-wealthy who are against. it. It's also a surprising group of. Democrats. Today, my [music] colleague Laurel. Rosenhall lays out how California. arrived at this moment and what it might. mean for the fight over inequality. nationwide. [music]. >> [music].

>> It's Wednesday, April 29th. >> [music]. >> Laurel, welcome back to the show. It's. great to have you here. Great to be. here. Thank you. So, we have you here. because we got word this week that a. historic tax on billionaires appears to. have gotten enough signatures to be put. to voters in California in November. So, just tell us why that matters at a. fundamental level. Well, this is coming.

at a moment when there is a lot of. anxiety about economic inequality. You. know, a lot of people are feeling. squeezed about affordability. In. California, the electorate is very. anti-Trump and feeling somewhat angry. about some of the cuts that he's done. and the ways that he seems to be. favoring billionaires. And so, people. are feeling emotional about that. >> Hmm. And this tax has ignited a big. pushback from many billionaires who are. spending tens of millions of dollars to.

fight it. And the scope of this tax and. the structure of this tax is very. unusual, and that's part of the reason. it's just generating such a firestorm. Okay, let's start there with the unusual. structure of it. Just explain what the. measure would do. So, this would place a 5% tax on the net. worth of any billionaires who are. California residents as of January 1st. of this year.

The money would go into a special fund. at the state level and would have to be. spent on healthcare services. Mhm. It's. unusual to tax the assets of a person as. opposed to their income. So, their. assets would be, you know, their stocks, the jewelry they own, the cars in their. garage, the paintings, Hmm. anything. that contributes to their wealth. Notably, it does not include residential.

property, so that's kind of an. interesting exemption. And then it's. also unusual on the revenue side to. create a special fund where the money. would go and that it could only be used. for this one purpose. So, unlike most of. the tax dollars that the state collects, which go into what's called the general. fund and then the elected leaders of the. state government decide how to spend it, this is requiring that 90% of it be.

spent specifically on healthcare. What does that actually mean? Like, does. that go to the money that people are. spending on their healthcare? The concept is that the supporters of. this tax want to make up for the massive. amount of funding that has been cut by. the federal government through what. Republicans called their big beautiful. bill. The cuts that were in that bill. that Trump signed last year were related.

to Medicaid and Obamacare subsidies, and. those health insurance programs pumped a. huge amount of money into the healthcare. system writ large. So, for the. supporters of this tax, they say this. money is essential to keep hospitals. open, to keep emergency rooms operating, and to keep the healthcare system that. Californians rely on operating at the. same level that it has been before these.

cuts go into place. So, just to put a. fine point on it, what's unusual about. this initiative is that one, it's taxing. assets, and that's really different. Normally, the way people raise taxes on. rich people is to tax their income. And. the other thing that's unusual is that. the vast majority of it, 90% of the. money, would go to this one purpose, healthcare. Right. And this is happening in a state. that has more billionaires than any.

other state. So, the supporters of this. tax say that it would affect about 200. people. However, there are, you know, various wealth management kind of. experts that I've interviewed over the. last few months, and they've told me. they think the number is probably. higher. Hmm. But right now, you know, no. one has like an exact count on how many. people would have to pay this. And so, how has this been received in.

California? Well, you know, it got a. 1.5 million signatures. So, there were. at least that many people who liked the. idea enough to sign a petition. You. know, I've been out with different. petition circulators watching this thing. in public parks and in front of grocery. stores, and the idea of taxing. billionaires, especially when you just. kind of say it in one sentence like. that, it's real easy for people to sign. on the dotted line. In polling shows. that more than half of voters support.

it. More than 70% of Democrats support. it in California. But even though it has a lot of support. seemingly from the public, there are a. lot of high-profile Democrats who have. come out against it and a lot of unions. who are just sitting on the sidelines. And some of that has to do with how this. whole thing came about. Interesting. So, how did it come about? >> [music].

>> This tax is being proposed by a specific. union called the SEIU-UHW. Stands for Service Employees. International Union United Healthcare. Workers West. Kind of a mouthful. Mhm. This union represents. hospital workers, including janitors, cooks, and various healthcare. technicians. And they're really concerned that the. Medicaid cuts from President Trump last.

year are going to lead to widespread. closures of ER rooms and hospitals in. the places where they work. And the. leader of the union is named Dave Regan, and he has a real long history of using. ballot initiatives in his labor. negotiation process. And he came up with. this idea for this billionaire tax and. teamed up with some very respected.

economists from different universities. around the country and put this proposal. together really on his own. Basically, this is coming from something like a. maverick operator in the world of. unions. And when he starts this thing, it's not like he has a huge coalition. behind him. Yeah, so they're working on. building a coalition. They got the. support of Bernie Sanders. He flew out. to LA and led this rally that was really. well attended and energetic. And the.

union started pouring millions of. dollars into gathering these signatures. They trained a bunch of volunteers. And. pretty much anyone who's been, you know, at a farmers market or grocery store in. California over the last few months has. probably seen someone with a clipboard. asking them for a signature on the. billionaire tax. And my understanding is the billionaires. did not respond well to all this. momentum. So, they started freaking out late last. year in advance of this January 1.

deadline because the ballot measure says. that anyone who was a resident of. California on January 1 of this year. could be subject to this tax. So, at the. end of the year, there was a lot of. jockeying, and there were a few pretty. high-profile billionaires who made moves. to leave the state, to change their. official residency. Hmm. A couple of the. founders of Google relocated. Sergey. Brin moved to the Nevada side of Lake.

Tahoe. Larry Page left for Florida. And. then also some of the people who are. really influential in the world of, you. know, investing in technology left. David Sacks moved to Texas, and Peter. Thiel moved to Miami. I have to say, this is always something that wealthy. people threaten to leave at any prospect. of a tax increase, but they don't always. follow through. In this case, you're. saying they actually did it.

At least a handful of them did, you. know? So, they did relocate. A lot of. them have multiple properties, so they. still have homes in California, but they. did change their official residence. And then meanwhile, the billionaires who. want to remain in California have been. plotting about how to adjust to this. thing. Hm. And you know, how to. basically mitigate or reduce their tax. liability if it passes. By what? Moving. their jewels and boats and paintings and.

stuff? What are we talking? Yes, exactly. that. >> Woah. It was kind of wild. I I went to. this conference in Orange County a. couple months ago where a bunch of tax. advisers and wealth managers were. meeting, and one of the sessions they. had was basically kind of like how to. help your clients reduce their net. worth. So, suggestions that were like, "Oh, move your Picasso out of your house. in Beverly Hills to your house in. Aspen." Or if you were carrying more.

insurance than you needed on your. wife's, you know, six-figure diamond. necklace, that just reduce the insurance. policy to what it's actually worth cuz. that's what you'll be taxed on. But, to be fair, there are people who. are just like, "Okay, fine, you know, we. live in California. This state has been. wonderful to us. If we have to pay more, we will.". For those who are fighting it, what is. their argument for why this tax is such.

a bad idea beyond just don't take my. money, I want it? So, they're really. drilling into the specifics of the way. that it's structured. Just the idea of. taxing assets and the requirement that. if this thing passes, you know, every. taxpayer in California will have to. declare if they're a billionaire or not. And then if so, they will have to. declare the value of all of their.

property and assets. And so, there are. people who just feel that that is wrong. They're arguing that a retroactive tax, because it would tax people who are in. the state as of January 1st, is. unconstitutional. And a major argument from Silicon Valley. is that this tax would absolutely. devastate California's ability to. continue dominating in the world of. innovation. Their argument is basically.

that the state has a lot to lose from. this tax, not just the billionaires. Absolutely. All of those billionaires. who would have to pay this wealth tax on. their assets, they already pay lots of. income tax. And that income tax is what. keeps most of the state of California. running. It pays for schools and public. safety and roads and all of the other. things that the state funds. And that is.

one of the reasons that Governor Gavin. Newsom is so vocally against this tax. He's very concerned about a short-term. bump in tax revenue from the billionaire. tax, but a long-term loss from that. ongoing loss of income taxes from people. who leave. Meanwhile, some of the most influential. unions in the state, the teachers union, the umbrella group for SEIU, they.

haven't publicly taken a position. And. privately, they're concerned about the. idea of a tax that gets locked up in. this special box and doesn't fund the. programs that most tax dollars do. So, there's a lot of different angles of. potential concern. And that's also why. many of the Democratic candidates who. are running for governor have expressed. some reservations. Even while they're. saying, "We think that rich people.

should pay more." They are raising. concerns about the structure of this. thing. Again, getting into the weeds. about how the money is spent. So, even. though this initiative seems like it. would go a long way toward establishing. potentially a new precedent, a new way. to tax the very rich and redistribute. that money, things that these folks. generally may agree with, they aren't on. board, it seems like, in part because of.

the particularities of how this bill. came about and who specifically benefits. from it. Right. >> [music]. >> And so, depending on how far this thing. goes, we may wind up seeing a situation where. the billionaires luck out if they can. form an alliance with other groups that. are much more sympathetic to the voters. I also want to say that this thing has a.

lot of different [music] potential. outcomes. But, there is the possibility [music]. here for a really strange bedfellows. kind of coalition to come together. We'll be right back.

Laura, you said it was possible that the. billionaires could assemble a strange. bedfellows coalition to fight this tax. Just talk about how exactly that would. work. Well, I think we have to start off by. acknowledging that there are a lot of. chess pieces on this board, and we just. don't know exactly how it's going to. play out. California has this ballot initiative.

system that a lot of political actors. use as leverage to get what they want. out of the legislature and the governor. And so, now that this thing has. qualified for the ballot, this is a. period over the next couple months where. there could be. some backroom negotiations to try to get. this thing off the ballot. Sergey Brin and the committee that he. created, they have put money into a.

couple of ballot measures that would. negate the billionaires tax. And it's. possible that those could be used as. leverage. Perhaps Governor Newsom gets. involved, and he could try to help. negotiate something that would keep this. from going on the ballot. And then there's another path, which is. these things all go on the ballot, and. they duke it out in front of the voters.

And that would become a very expensive. campaign season where voters are. subjected to conflicting ballot measures. on these tax issues. Let's talk about Newsom here, because I. think he's in a really interesting. position. On the one hand, it makes. sense that a potential 2028 contender. for the presidency doesn't want to. alienate billionaires. But, it would also seem perilous for him.

to stake out a position that it, at. least on the surface, might paint him as. not wanting to tax the wealthy at this. moment when economic populism is so. potent. So, talk to me about his. motivations and the position he finds. himself in. Well, I think you summarized. it exactly right. And that's why when he. does talk about this, he really focuses. on his objection to a state-specific.

wealth tax. And he does frequently say, "We ought to. have a conversation about a national. wealth tax." Leaving the door open to. the idea of a wealth tax if it was. applied evenly across the country. He's. trying to thread a needle there, right? He's saying, "I'm not opposed to this. thing, but I'm opposed to a version that. puts California at a disadvantage. And. the way to handle this is at the. national level. That's the way to go. about this." Right. Without fully.

committing that he would do it at the. national level, but say if we were going. to do it, that's what we should explore. And it is worth noting that he has. opposed many wealth taxes in the past. when they've come up in the California. legislature. >> [gasps]. >> The other thing he focuses on is that. California has a very progressive income. tax structure. And the state does levy a. lot of taxes on the wealthiest earners. And saying that he agrees with the moral.

argument to tax the rich. He's again threading the needle. Whereas, on the more progressive side of. the Democratic Party, you have people. like Bernie Sanders saying, "Look, don't. let the perfect be the enemy of the good. here. Taxing billionaires is good. Maybe. this isn't going to solve all of our. problems, solve inequality writ large, but overall, we support this concept.". Obviously, Bernie Sanders doesn't have. to be the governor of California, but. you see the contrast there.

Exactly. And so, for Bernie Sanders, who. is, you know, deeply invested in the. idea of taxing billionaires and fighting. the oligarchy, the particulars are of less concern to. him. >> Mhm. The point is levying a tax on the. people who have so much to help people. who have less, he doesn't see any. problem with that. What is the message, do you think, of. this fight in California for other. states that are pursuing populist.

policies like this? I'm thinking of New. York, where Governor Hochul is proposing. a pied-à-terre tax. Because, on the one. hand, this tax, you said, has a lot of. support. And on the other, there is this. very loud opposition that seems to be. rooted in a fear of alienating. billionaires or losing them because the. state has become very reliant on these. ultra-wealthy people. Well, I think. there's a couple lessons we can take.

away from this. One is that the idea of sticking it to. the rich is very popular. The other lesson is that it's still. really hard to pass and get across the. finish line because of all of the. particulars involved, because of the way. that a tax is structured, and because of. how influential. the billionaire class is in our society. Right. The third lesson is that because.

it's so hard, people who want to do this. kind of thing need a really broad base. of support to push it across the finish. line. And I think that is what we're. going to be seeing in California. That. will be tested over the next few months, how strong the support is for this idea, given how hard it is to go up against. these opponents. Can I just step back. and ask, given how imperfect this. measure is,

why have the billionaires been so. freaked out about it? Because, from what. you said, it sounds like it may have. actually been relatively straightforward. for them to move some of their wealth. elsewhere for a single year. It's also. just a one-time 5% tax. So, what about. this proposal is so scary to them? For. the billionaires, and also many tech.

leaders who are not billionaires, but. who are aspirational, they see this as a kind of an. existential threat, that it really would. set a precedent of going after the. wealth that people have earned and. taxing their possessions in a way that. really has never been done before. Hm. On the other side, that is also part of. the motivation for this thing, to really. shift the paradigm in how.

[clears throat] the government taxes. wealth and how the government gets. people to contribute to society. And in. a time when many wealthy people have. shifted their assets into various. accounts for tax dodging, that this. would be another way to go after the. real wealth that people have and try to. provide more for people in society who. have so little.

I think this measure is forcing a lot of. people into the uncomfortable territory. of reckoning with the moment we're in. >> [music]. >> It's pushing the whole anxiety about the. billionaire class and economic. inequality [music]. right to the forefront.

>> [music]. >> Well, Laurel, thank you so much. Thanks. for having me. >> [music]. [music]. [music]. >> We'll be right back.

Here's what else you need to know today. Earlier today, a grand jury in the. Eastern District of North Carolina. returned a true bill indicting Mr. James. Comey with committing two felonies. >> [music]. >> The Trump administration has secured a. new indictment against one of the. president's biggest enemies, former FBI. Director James Comey, >> [music]. >> months after its last indictment against. Comey ended in failure. He knowingly. [music] and willfully making a threat to.

take the life of and to inflict bodily. harm upon. the president of the United States. Count two. >> This time, the Justice Department. charged Comey with making a threat. against Trump because of a photo Comey. shared on social media of seashells. arranged on a beach to say 86 47. Since 86 can be slang for removing. something, and Trump is the 47th. president, allies of the president have. construed the photo as a threat to kill.

Trump. Threatening the life of the. president of the United States will. never be tolerated by the Department of. Justice. Comey has repeatedly denied threatening. to harm the president. I'm still. innocent. [music]. I'm still not afraid, and I still. believe in the independent federal. judiciary, so let's go. >> [music]. >> And Mr. Speaker, their majesties, King. Charles III and Queen Camilla. In a speech to Congress on Tuesday, King. Charles delivered an optimistic.

assessment of the relationship between. the US [music] and Britain at a moment. in which that relationship is arguably. at its lowest point [music] in decades. With the spirit of 1776 in our minds, we can, perhaps, agree that we do not. always [music] agree. In his speech, Charles declared that. disputes between the two nations have. defined [music] their shared history, dating back to the American Revolution. against Britain in the 1770s. [music].

Indeed, the the very principle on which. your Congress was founded, no taxation without representation, was at once a fundamental disagreement. between [music] us, and at the same time a shared democratic. value, uh which you inherited from us. Ours is a partnership born out of. dispute, [music]. but no less strong for it. After the. speech, President Trump hosted Charles. and his wife, Camilla, for dinner at the. White House. Before we really begin, I.

want to congratulate. Charles on having made a [music]. fantastic speech today at Congress. He. got the Democrats to stand. I've never. been able to do that. I couldn't believe it. Today's episode was produced by Olivia. Nat, Shannon Lynn, Claire Tennisgetter, [music]. and Jack Disidoro. It was edited by. Paige Cowett and Patricia Willens. Contains music by Marion [music] Lozano.

Our theme music is by Wonderly. This episode was engineered by Chris. Wood. >> [music]. [music]. >> That's it for The Daily. I'm Natalie. Kitroeff. See you tomorrow.