Prop 40 is known as the billionaire's tax. It would require the estimated 200 Californians whose net worth exceeded $1 billion at the start of the year to pay a one-time 5% tax.
We spoke with Riley Cook, a city hall reporter with Palo Alto Weekly, about how this one has played out up to now in Silicon Valley.
COOKE: A lot of the billionaires who live in and around Palo Alto are spending a ton of money to try and defeat Prop 40, which would tax them based on their net worth. So we have about, give or take, 50 billionaires in our coverage area, and they have a combined net worth in the trillions of dollars, and so many of them have been shelling out thousands, hundreds of thousands, or millions of dollars to defeat this tax, and I think that speaks to how, how much of an impact it may have on them.
BEN TREFNY, HOST: One of the concerns that people have brought up, or, you know, even them themselves, is the possibility of that tax base leaving the state if this were to pass. Do you get the sense that that's a possibility?
COOKE: I get the sense that it is a possibility, but as we saw with Mark Zuckerberg recently, he was thinking about leaving the state and Meta actually negotiated a deal with him to allow him to remain in California, and basically Meta is gonna foot the tax bill for him. So I think that a lot of these big tech companies where these billionaires have gained their wealth may attempt a similar tactic to try and keep the people in charge in California. There are a lot of benefits to being in California, and honestly, leaving the state the way that the tax is set up is that even if they did leave now, they would still be taxed, and so I don't really see why leaving would make any difference unless the state tries to levy another tax in the future.
BEN TREFNY, HOST: Do you think that that would be likely? I mean, it seems like it could be a precedent-setting proposition.
COOKE: It could be, but we'll also have to see how it plays out in the courts. My understanding is that this tax, if it does pass, would probably immediately be challenged in court, and so we'll have to see how that, that plays out and whether or not a tax like this in the future is even feasible.
