California Voters Decide One-Time Billionaire Tax for Medicaid
Silicon Valley executives have spent $333 million opposing Proposition 40, which would levy a 5% fee on fortunes exceeding $1 billion to fund state healthcare.
By Takeshi Davidson ·
California voters are set to decide on a one-time wealth tax in the upcoming midterms. Proposition 40 would take 5% of fortunes above $1 billion and direct 90% of the revenue to the state's Medicaid program. The measure arrives shortly after Elon Musk became the first person to reach a net worth of one trillion dollars when SpaceX began trading on the Nasdaq in June.
A group of Silicon Valley billionaires, including Google co-founder Sergey Brin, has spent more than $333 million campaigning against the tax. They warn that the levy will backfire and push wealthy residents out of the state. This opposition mirrors historical reactions to new forms of taxation, such as the income tax, which the Supreme Court struck down in 1895 before the 16th Amendment made it standard in 1913.
Proponents argue that the tax addresses a disparity where the wealthiest households often pay lower effective tax rates than their employees. The source text supports Proposition 40 but argues it is insufficient for fixing underlying economic issues. It contends that a wealth tax recovers value long after it has been created and compounded. The article suggests that the origins of extreme wealth matter because much of it stems from publicly funded research.
Examples cited include the iPhone, whose foundational technologies like GPS and voice recognition came from public research funded by the Defense Advanced Research Projects Agency. Google's search algorithm grew out of a National Science Foundation project at Stanford. SpaceX, which made Musk a trillionaire, received $396 million from NASA to develop the Falcon 9 and Dragon capsule. It later received $1.6 billion to fly cargo to the space station and $2.6 billion to fly astronauts.
The author describes these figures as a "brologarchy" that profits from "algorithmic rents." This term refers to returns from owning platforms, data, and models that others must use. The public carried the risk for these technologies in their early years. The state is criticized for not setting terms in initial contracts to secure a fair share of the rewards for the risk the public took.
The Department of Energy illustrates this asymmetry through two near-identical loan guarantees issued in 2009. It gave $465 million to Tesla and $500 million to Solyndra. Solyndra collapsed two years later, and the taxpayer absorbed the loss. Tesla repaid its loan nine years early, causing government warrants that would have given the state a stake if the loan failed to lapse. This dynamic is described as socializing risk and privatizing reward.
NASA previously used incentive contracts that tied contractor fees to cost, schedule, and performance. The CHIPS and Science Act attached conditions to $52.7 billion in semiconductor funding, specifying plant locations and job creation. The author argues these conditions did not go far enough, noting that wage standards covered only laborers and mechanics. The text advocates for "pre-distribution," which shapes how value is created and shared at the outset. This approach includes equity stakes in companies built on public loans and royalties on patents from publicly funded research. Alaska has paid residents a dividend from oil revenue since 1982, serving as a model for a citizens' dividend.
