Sergey Brin, the Google co-founder and the world's fourth-richest person, just donated an additional $20 million to the anti-tax coalition Build a Better California, which is spearheading the opposition to the state's billionaire measure. That brings his total spending to more than $100 million.
The tax in his way is Prop 40. It is a one-time 5% levy on the net worth of about 200 billionaires who live in California, not an income tax.
Most of that wealth is tied up in stocks and other assets, which is exactly what a net worth tax reaches. The money from the tax would go mostly to healthcare programs.
Brin has a simple reason to be worried. His net worth, the total value of what he owns, sits at roughly $267 billion, so the tax would cost him an estimated $13.3 billion. That is a big check even for someone with his money, and it goes a long way toward explaining the campaign.
California's Medicaid program, which covers low-income residents, may see as much as $30 billion in federal funding disappear next year due to Trump budget cuts. January is the first month of that new year, and supporters of Prop 40 see the billionaire tax as a way to fill part of the hole.
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The tax would only touch about 200 people, so most workers never write this check. Governor Gavin Newsom is not on board, though. He worries about billionaires and businesses fleeing the state, and he would rather push a national billionaires' tax than a California-only one.
Newsom says the current tax system is rigged in favor of the rich. "Today, the office worker can shoulder a higher tax rate than the heiress," he said, and he wants to end what he calls "the gimmick that lets the ultrawealthy borrow against their stock portfolios while reporting no taxable income."
Not every billionaire feels the same way. Jensen Huang, the Nvidia co-founder who would owe about $8 billion, says "I have not even thought about it once" and is "perfectly fine" with the tax. "We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it," he said.
Others have already left, or at least set up homes elsewhere. Mark Zuckerberg has reportedly purchased a $170 million residence in the Miami area this year, while Travis Kalanick, Peter Thiel, and Larry Page have all left California.
Brin's group is not stopping at ads. It has proposed opposing ballot measures that could block Prop 40 by limiting new taxes, giving the campaign a backup plan.
Californians will vote in November, and the outcome will shape the state's finances for years. For investors, the fight is bigger than one ballot measure, because where billionaires and top founders choose to live helps determine where the next generation of companies gets built.
That can move the stocks in your portfolio. Tax policy has a way of changing the map of the tech industry, and a one-time 5% wealth tax aimed at 200 people sets a precedent for how California raises money.
That makes the November vote more than a California story. It is a signal about who the state wants to keep, what it asks them to pay, and whether that math still works for the companies investors rely on.
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