Why did California's billionaire tax fail to surf the blue wave?
asserted
tax → fail → wave
Late Monday, The Associated Press determined that California voters had rejected Prop 40, the proposed billionaire wealth tax I wrote about last week.
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I → determine → Prop
Given the big blue wave we saw during the midterms, why did this tax on billionaires fail to surf to victory?
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tax → give → victory
To make sense of the results, I went back to the two economists I spoke with last week: UC Berkeley's Gabriel Zucman, a leading champion of wealth taxes, and Stanford's Joshua Rauh, a prominent critic of Prop 40.
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I → make → Prop
Last week, they disagreed on what this wealth tax on billionaires would do to California's economy and tax revenue.
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tax → disagree → economy
Now comes the sequel, in which they disagree on what the results say about the politics of wealth taxes.
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results → come → taxes
Their debate could foreshadow a bigger one in the next Democratic presidential primary: should the party embrace a wealth tax?
Did billionaire money tip the scales?
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money → foreshadow → scales
Zucman blames the corrosive influence of money for Prop 40's failure.
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Zucman → blame → failure
"I am not surprised," Zucman says.
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Zucman → say → ?
Opponents of Prop 40 spent almost $400 million fighting it, including spending on competing ballot measures, making it one of the most expensive ballot initiative fights in history.
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it → spend → history
"The money spent by the billionaires was critical," Zucman says.
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Zucman → spend → billionaires
"Anyone who lives in California has been carpet-bombed by a deluge of ads.
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who → live → ads
One can easily see how this could be pivotal in such a closely contested ballot.
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this → see → ballot
But didn't Democrats win plenty of races this cycle despite huge sums spent against them?
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Democrats → win → them
In Texas, for example, Elon Musk alone poured more than $150 million into defeating Democrat James Talarico.
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Musk → pour → Talarico
And Talarico ended up winning his Senate race by a comfortable margin.
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Talarico → end → margin
For one, Zucman says, the spending gap was much bigger in the fight over Prop 40.
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gap → say → Prop
"The billionaires spent more than $300 million on ads versus negligible sums on the other side," Zucman says.
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Zucman → spend → side
"On TV and in their mailboxes, voters were exposed only to the anti-tax arguments.
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voters → expose → arguments
It's also possible that money can matter more in ballot initiatives than in races between candidates.
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money → matter → candidates
Analysts have complained for decades that California's ballot initiative system is too easily manipulated by special interest groups.
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system → complain → groups
The nitty-gritty details of specific policies can get complicated, and many voters don't take the time to get educated on them.
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voters → complicate → them
That can give well-funded advertising campaigns more power to shape their views.
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That → give → views
In candidate races, meanwhile, voters can at least fall back on name recognition or party labels, which give them an easy mental shortcut — what social scientists call a "heuristic" — when making decisions at the ballot box.
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scientists → fall → box
Even when they know little about the candidates, they usually know which party they prefer.
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they → know → party
But Prop 40 didn't come with the same clear partisan signal.
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Prop → come → signal
In fact, prominent Democrats, including California Gov. Gavin Newsom, came out against it.
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Democrats → include → it
Newsom said he favored a national minimum tax on billionaires instead.
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he → say → billionaires
"Popular opinion on wealth taxes is clearly not as strong as proponents thought," Rauh says.
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Rauh → think → taxes
Rauh questions whether money and advertising can really explain Prop 40's poor showing.
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money → question → showing
He compared support for the tax with support for Kamala Harris in the 2024 presidential election.
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He → compare → election
In some of "the most progressive Bay Area counties," he says, Harris won overwhelming support while Prop 40 won much less.
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Prop → say → less
This gap between support for Harris and support for Prop 40 was bigger there than it was in other Democratic-leaning counties across the state.
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it → lean → state
If advertising was the main explanation for this tax's poor showing, he argues, why was the gap so much bigger in the Bay Area?
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gap → argue → Area
Sure, he says, advertisers may have done more targeting there, but he thinks the uneven pattern across the state casts doubt on the idea that advertising was the decisive factor.
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advertising → say → idea
"[T]he counties with the largest defections are actually the ones whose residents are most likely to know a billionaire, to work for one, or to have watched one move to Texas or Florida," Rauh writes in a recent post.
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Rauh → know → post
"The simple reading is that proximity to the people being taxed, and to the businesses they fund, made voters more skeptical of the tax relative to their baseline politics."
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voters → tax → politics
For Rauh, that skepticism points to a broader conclusion: "The electorate even in progressive California has shown that it isn't ready for a wealth tax," he says.
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he → point → tax
More moderate Democratic voters, especially in affluent areas like the Bay Area, may simply dislike this novel way of taxing rich people in America and the consequences it could have.
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it → dislike → America
After all, this policy idea has divided Democrats before.
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idea → divide → Democrats
…and 34 more, not listed.
The Aporia
