For my blog last month, it was Pleonexia, the Greek word describing the insatiable greed of the ultra-rich. Today it is Plutocratifornia (Plu-toh-crati-fornia), my word for when plutocracy comes out of the closet in California, publicly demonstrating the unmistakable impact of excessive wealth.
California is one of 21 states in the U.S. that allow for ballot initiatives to enact either constitutional amendments or state statutes. There are pros and cons to the initiative process, often referred to as direct democracy. If representative democracy were working perfectly, or near-perfectly, we would not need ballot initiatives. As taught in school textbooks, legislators would reflect the people’s will. But thanks in large part to unchecked corporate power and excessive wealth, the peoples’ interests are often replaced by monied interests.
Excessive wealth, fueled by greed, is the root cause and driving force behind the manipulation of our democracy. It is why our weak campaign finance laws and the Citizens United decision have happened: The ultra-rich have used their excessive wealth to ensure that Congress and the Supreme Court will do their bidding to protect their financial interests over the public interest. The ballot initiative process, intended as an antidote to unrepresentative government, is often even more skewed in favor of the ultra-rich–and the California wealth tax initiative is Exhibit A.
But let’s start closer to (my) home, San Francisco. Billionaire Mayor Daniel Lurie spent a record-breaking $16 million, most of it his own money, to get elected. This broke the previous record of 2003 when Gavin Newsom spent $5 million to become mayor. It has recently come to light that donors plan to spend $30 million through a 501c3 tax-deductible charity called Believe in SF to enhance the Mayor’s image by supporting some of his pet projects. It is an example of where campaign finance laws are not sufficient alone. As Paul Krugman recently wrote, “if we want to reverse the spiral of oligarchy, we need to limit the concentration of wealth at the top,” which requires a wealth tax, not an income tax, solution.
The Billionaire Tax Act initiative (Proposition 40) on the California ballot this November is a 5% wealth tax on billionaires (only billionaires) and would, if enacted, be the most significant tax legislation the country has seen since the introduction of the federal income tax in 1913. Why? Because it will demonstrate the effectiveness of the only type of tax that can curb excessive wealth and plutocracy in our lifetimes.
An income tax can slow the growth of wealth inequality, but it doesn’t reduce excessive wealth–the tax applies only on the increase in one’s wealth, not on the wealth itself. This is true even if capital gains were taxed at the same rate as earned income. There have been attempts to tax the unrealized capital gains that don’t even get reported as income, but that approach ignores the extraordinary wealth that the ultra-rich have already realized. The estate tax, or an inheritance tax, is a form of wealth tax, but even if it were designed so that all loopholes were closed, we’d still have to live with plutocrats for at least another 40 to 60 years. None of this is to say that these other ultra-rich taxes (URTs) aren’t important in terms of tax fairness and providing resources for critical public investments and services–they just are not effective at diminishing plutocracy.
The ultra-rich understand this, and used to getting their way, are doing everything they can to defeat Prop 40. Billionaires have not only raised a staggering $100 million to defeat the initiative (approximately $20 per vote needed to win) but have put two counter-initiatives on the ballot that effectively preclude wealth taxes from ever being enacted.
Ironically, most of the funding comes from people living outside of California. Sergey Brin–Google co-founder, $240 billion in net assets, reported residency Miami–has already invested more than $80 million in the anti-campaign. Supporters of Prop 40 will unlikely raise more than a couple of million dollars. Is this a fair fight? Do voters get a chance to make an informed choice? No, this is plutocracy writ large.
It is worth noting that in 2025, Brin’s wealth increased by more than $80 billion (that’s more than $200 million per day)! The billionaire tax, which the initiative would allow him to pay over five years, would amount to less than $15 billion. Of course, it sounds like a big number, but as a percentage, it is less than his secretary pays in income taxes! The scary part is that his $80 million “investment,” 0.1% of the amount that his 2025 wealth increased, is just the tip of the iceberg of what he can afford to spend–and likely will–on his efforts to defeat the initiative.
The plutocrats are marshalling all their influence to defeat Prop 40. The billionaire’s friend, Gavin Newsom, is leading the charge on behalf of all the state’s campaign-contribution-beholden electeds. Billionaire-owned media outlets are railing against the wealth tax. And even some nonprofit organizations, for reasons that befuddle me (fear of contributor backlash?), are withholding support of the initiative, even though the money raised by the initiative primarily supports the healthcare system being crushed by Trump-initiated cutbacks.
Next month I’ll address the specious arguments made to defeat the Billionaires Tax Act initiative. It is obvious that without the lopsided influence of billionaires on voters, Californians know what’s needed and who speaks for them. In TGB polling, California voters, who approved of Newsom by 75%, dropped their support to 56% (a 19% drop!) when they learned that he opposed the billionaire wealth tax. Gubernatorial candidate Becerra, beware.
California’s billionaire wealth tax initiative has brought plutocracy out in the open. Can billionaire money convince voters to vote against their self interest and the interests of California? We’ll see.