California Rejects Billionaire Tax Despite Union Backing

California voters rejected Prop 40 on Tuesday, ending a contentious battle over a one-time 5% tax on billionaire wealth. The Associated Press called the race, confirming the defeat of a measure that pitted major labor unions against wealthy tech executives.

Supporters, led by the Service Employees International Union healthcare workers division, argued the tax would generate $100 billion for medical care. They contended that Republican-led federal cuts necessitated state-level intervention to support healthcare infrastructure. The state is home to more than 200 billionaires, according to estimates.

The proposal fractured the state’s Democratic establishment. While Rep. Ro Khanna and Sen. Bernie Sanders campaigned in favor, Gov. Gavin Newsom and gubernatorial candidate Xavier Becerra opposed it. Newsom argued a national tax would be more effective than a state-specific measure.

Opponents claimed the tax would force the wealthy to leave California, reducing state revenue. Google co-founder Sergey Brin spearheaded a campaign against the measure, driving a spending surge. At least five times as much money was spent opposing Prop 40 as supporting it.

Brin also funded two additional ballot measures designed to block the billionaire tax if it had passed. A major teachers union also voted against the proposal because it allocated only a small share of the potential revenue to schools.

The outcome leaves the state without the new revenue stream for healthcare, despite the high concentration of ultra-wealthy residents. The political divide within the party remains a focal point for future legislative strategy.