California billionaire tax will appear on ballot after deadline for deal passes

Proposal to introduce one-time tax of 5% will go to voters in November after backers decline to withdraw measure

California’s billionaire tax, explained: what you need to know

California voters will get to decide in November whether billionaires should pay a one-time 5% tax, after a deadline passed on Thursday for its backers to withdraw the measure.

The so-called billionaire tax is among the highest-profile ballot efforts in the US this year taking aim at rising wealth disparities, and is set to be one of the state’s most contentious ballot initiatives. It has already spurred tech moguls to pour millions of dollars into attempts to stop the proposal.

State officials announced last week that the California Billionaire Tax Act had reached enough signatures to qualify for the ballot, but the elections process allowed the coalition backing the tax until 5pm on Thursday to decide whether to move forward with it.

Negotiations this week between the unions behind the effort and Governor Gavin Newsom failed to reach a deal by the cutoff, with California’s secretary of state subsequently confirming the tax proposal would go to voters. To get on the November ballot, backers of a measure must first gain a certain threshold of signatures from California residents in support of the initiative.

The ballot proposal was put forward by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which has argued it would fund the state’s healthcare, education and food assistance programs. Newsom and billionaire-backed groups opposing the tax allege that it would drive business out of California and harm the economy.

The billionaire tax has grown in prominence throughout the year as proponents gained over 1.55m signatures by April alone, more than double the requirement for getting on the ballot – something organizers say is testament to its popularity.

Meanwhile, Silicon Valley elites campaigned hard against the proposal, with wealthy tech moguls including the Palantir co-founder Peter Thiel, crypto billionaire Chris Larsen and Google co-founder Sergey Brin funding opposition groups such as the California Business Roundtable.

Brin alone has spent tens of millions since January to kill the effort, while his co-founder Larry Page has made moves to cut ties with the state.

Opponents of the tax have also pursued their own ballot measures to undercut its effects. The group Building a Better California has put forward an initiative, which gained enough signatures to qualify for the ballot, to prohibit new taxes on retirement holdings, individually owned assets, and other forms of personal savings. Brin has donated $82m to the group.

While billionaires have largely funded the committees fighting the tax, the measure has also received recent criticism from several prominent labor unions that have joined a coalition to oppose it. The California Teachers Association and the State Building and Construction Trades Council of California are among the unions who have come out against the tax , claiming that it will not provide a sustainable source of funding. The split within labor unions could become more acrimonious now it is headed to a popular vote.

Medical organizations such as the California Medical Association and Planned Parenthood Affiliates of California have also joined the coalition to oppose the tax. A spokesperson for Planned Parenthood Affiliates of California told the Guardian that the group “agrees the wealthy must pay their fair share”, but that the measure was “shortsighted” and “does not offer a sustainable solution to funding cuts”.

Newsom, who is widely viewed as a potential Democratic presidential candidate in 2028, has long denounced the wealth tax as a threat to the economy, and previously vowed he would block it from the ballot. Despite some observers viewing the proposal as a union bargaining tactic and the SEUI-UHW offering Newsom a deal last week to lower their demand to a 2% tax, the governor did not accept a watered-down version of the proposal.

California has about 200 billionaires, more than any other state, many of whom are part of the tech industry and have increased their fortunes amid the AI boom. Brin has increased his net worth by nearly $100bn in the past year, according to Forbes, and is now the world’s third-richest man with around $258.9bn. Page is one spot above him on the list and worth about $280bn.