California voters have rejected a one-time tax on the fortunes of the state’s billionaires, after the people it would have taxed financed one of the most expensive ballot campaigns in the country. The money was meant mostly for Medi-Cal, the health program that covers roughly a quarter of Black Californians.
Proposition 40 would have charged a single 5% levy on about 200 residents worth more than $1 billion. Backers projected it would raise roughly $100 billion over five years, with most going to health care and the rest to food assistance and schools. The campaign against it, run through a group called Building a Better California, spent more than $304 million, according to Mission Local. Google co-founder Sergey Brin gave more than $100 million of that. San Francisco billionaire Chris Larsen gave $12.5 million.
Two companion measures, Propositions 41 and 42, were written to cancel the tax if either drew more votes than it did. Prop. 42, which would bar a personal property tax, was reported ahead on election night.
Why Black Californians had a stake
The tax was pitched as a backstop against federal cuts. Congress’s Medicaid reductions are expected to cost California about $30 billion a year, and the state’s health program already faces a deficit of that size. Black residents are about 6% of Medi-Cal enrollees, but researchers estimate roughly a quarter of all Black Californians rely on the program for coverage. When Medi-Cal shrinks, they feel it at a higher rate than most.
That is not an abstraction in a state where Black patients already face the worst maternal outcomes and shorter lives than their neighbors. A program that pays for prenatal visits, dialysis and clinic care is not a line item to them.
Opponents made their case plainly. The California Business Roundtable and the California Medical Association argued that billionaires could leave the state and take future tax revenue with them. Susan Shelley of the Howard Jarvis Taxpayers Association said: “It’s a new kind of tax for California that we think would definitely grow to encompass more people.”
That argument deserves an answer. The tax was a one-time charge, not a new permanent rate, and it was aimed at roughly 200 people. The people it targeted decided it was worth more than $300 million to stop it. That is more than a million dollars for every billionaire it would have touched, spent so that someone else’s clinic would face the cuts alone.
The campaign for the tax was also hobbled. About 230 staffers with the union that led it, SEIU-United Healthcare Workers West, went on strike the week before the vote, which halted its ground operations. Sen. Bernie Sanders had called it “the most important ballot initiative in the country.”
The vote leaves the state with the same hole and no new source to fill it. Sacramento will have to decide in its next budget whether Medi-Cal’s coverage shrinks or the money comes from people who did not have to spend $300 million to keep it. Black Californians should expect lawmakers to be asked which.
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