California voters defeat billionaire tax proposal that divided Democrats

California voters rejected Proposition 40, the billionaire tax, which had divided Democrats with opponents saying it would drive the wealthy from the state. Jae C. Hong/AP hide caption

Jae C. Hong/AP

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California voters have rejected a proposal to charge billionaires a one-time 5% tax on most of their wealth, according to a race call by The Associated Press.

Proponents said the tax could raise $100 billion for healthcare. Led by a union that represents healthcare workers, the SEIU-UHW, advocates of the tax said the Republican-controlled Congress cut healthcare programs to give tax breaks to the wealthy, so it was time for the wealthy in California to fill the gap. The state has more than 200 billionaires, according to estimates, with some putting the number at a few hundred.

Opponents argued that the proposal, known as Prop 40, would just drive the wealthy out of California, costing the state revenue and harming its economy.

But the measure divided Democrats in a state where they heavily outnumber Republicans.

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The state's Democratic Party favored Prop 40, as did Rep. Ro Khanna, D-Calif., and Sen. Bernie Sanders, I-Vt., who went to the state to campaign for it. But Democratic Gov. Gavin Newsom opposed the tax, saying it would be better to have a national tax on the wealthy. The Democratic candidate for governor, Xavier Becerra, also opposed it.

A leading teachers union also opposed the proposal, which would have set aside just a small portion of the resulting revenue for schools. And Google co-founder Sergey Brin led other wealthy Californians in a surge of campaign spending opposing the measure. At least five times as much was spent opposing the measure as favoring it.

Brin also drove a campaign that put two other proposals on the ballot to block the billionaire tax from taking effect, had it been approved by voters.

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