One week after being appointed to the California Community Colleges Board of Governors by Governor Newsom, Katie Porter penned an op-ed against Prop 40, California’s proposed wealth tax on billionaires. Gov. Newsom happens to be vehemently opposed to Prop 40, and I’m sure the timing of the appointment and op-ed was just a coincidence. Regardless, the piece was one of the most cynical arguments I’ve seen to date. This was especially disheartening to see from Porter, who I have respected as a policy wonk in the past. You can read the whole thing here.
Before I get into it, I want to explain exactly what Prop 40 is and why we need to pass it. In 2025, Trump and the GOP-led Congress passed H.R. 1, which gave historic tax cuts to the richest people in our country primarily by slashing Medicaid and SNAP benefits. The biggest Medicaid cuts hit January 1, 2027 — just two months after Election Day — and up to 3.4 million Californians will lose their healthcare over the next decade. Researchers at Harvard, Yale and Penn estimate these cuts will cause thousands of deaths every year — tens of thousands of Californians over the coming decade. This is truly a Trump-made emergency.
Prop 40’s answer is simple: fix the healthcare emergency by having billionaires pay a one-time 5% tax on their wealth. It can be paid all at once, or they can pay it over five years. This would raise about $100 billion, of which 90% would go towards Medicaid and healthcare, while 10% goes towards education and food assistance to offset the cuts Trump’s bill made to SNAP.
Billionaires just got a massive tax cut from Trump. California billionaires’ wealth grew more than 30% a year from 2023 to 2025 and is on track to match that this year. That means a person worth $1 billion will make bout $300 million this year without lifting a finger. Because of that, billionaire wealth in California has increased to become more than half our state’s entire GDP – and equal to the total income earned by everyone in the state every year (who do work for that income). Billionaire wealth in America has grown more than ninefold since 2000.
So billionaires will barely even notice a one-time 5% wealth tax. Is it really so bad for a billionaire to make merely $235 million this year instead of $300 million if that means millions of people get to continue having healthcare and we save tens of thousands of Californian lives?
Well, the billionaires think it’s really, really bad. That’s why they’ve spent about $200 million spreading lies and bad faith arguments against it. The politicians they fund, like Gavin Newsom (who is going to rely on these billionaires to fund his presidential campaign), are going all out campaigning against it. And as a result, even though Prop 40 started out polling extremely well, it’s now at risk of failing.
And as if spreading lies about the wealth tax isn’t enough, the billionaires spent more than $130 million to put two poison pills on the ballot against Prop 40 – Prop 41 and Prop 42. If either of those passes with more votes than Prop 40, Prop 40 will fail to pass even if it gets over 50% of the vote. These are the kinds of tricks you play on voters when you know you are in the wrong and can’t win on the merit of your arguments.
So I want to get to all those arguments. But I want to start with Katie Porter’s, since I find hers the most egregious. In her op-ed, Porter argues that our healthcare system is broken, and Prop 40 does not fix the underlying system. We should pass single payer healthcare instead because further funding to healthcare as it is today will mean more money going to a broken system.
I am certainly sympathetic to the argument that our healthcare system is broken, and I am all for structural fixes to it. I worked for Bernie Sanders in 2016 because I wanted Medicare for All. I started Justice Democrats to recruit Democrats who would back single payer healthcare to run against corporate Democrats who were against Medicare for All. I believe we need universal healthcare, and I have fought hard for it against both Republicans and members of my own party. People have called me “far left” or “extreme” for this. But even I am not extreme enough to say we should cut Medicaid or the ACA funding now just because it’s not perfect.
But that is essentially what Porter is arguing for. So I would ask Katie Porter: if you believe funding our current healthcare system is bad, would you join with Republicans to vote against restoring the Medicaid cuts if you had the chance in Congress? Do you believe Trump was right to cut ACA subsidies, since those also go to a broken healthcare system? Because a vote against Prop 40 is, in fact, a vote for cutting Medicaid funding.
In her op-ed, Katie Porter also parrots the same argument Gavin Newsom has been making by fearmongering that this wealth tax will cause billionaires to leave California, which will actually reduce our revenue. She fails to mention that, first off, the tax applies to any billionaire who has been living here since January 1, 2026 – so even if they leave after it passes, it doesn’t matter. But beyond this, she and Newsom both don’t understand why over a quarter of all billionaires in America call California home. They don’t do it because of our tax rate. They live here because they want to live here.
What’s the point of becoming a billionaire if you won’t even live where you want to live? Do we really think that a 5% hit, which, again, is barely even a sixth of the money they will make this year, is going to make billionaires move away from California? Billionaires are here because living in California is how they make their money. Silicon Valley is here, the talent is here, startups are here. Remember how a bunch of them tried to move to Florida during COVID? Turns out, they all came back as soon as they could.
But for the sake of argument, let’s say all 250 billionaires in California decide, en masse, to move. Well, here’s another secret about billionaires she doesn’t mention: they pay almost no income taxes. Billionaires avoid taxes by borrowing off their wealth for consumption, or relying on capital gains, which are taxed at a much lower rate. That’s why even if all the billionaires in California moved away, it would take 25 years before the lost income taxes matched what Prop 40 raises.
The ads against Prop 40 that we’re seeing on TV are even worse. I’m sure you all have been inundated with ads saying Prop 40 is a Trojan Horse – that once we tax the wealth of billionaires, it’s only a matter of time before the state comes for all of us. Except, this is just a lie – the law is very clear in that it applies only to people worth over $1 billion. Similarly, ads claiming this will tax retirement accounts are completely made up. Retirement accounts, pensions and directly held real estate are excluded in Prop 40. And again, you are excluded entirely if you are not a billionaire! All of this is fearmongering.
Finally, there’s the argument about the constitutionality of Prop 40. GrowSF’s voter guide says “No state has taxed net worth this way, and the measure schedules its own court fight to run into late 2027.” So they recommend voting for Prop 3 instead.
Well first off, no one is stopping you from voting for Prop 3 and Prop 40. So please, do both.
But on the other point, GrowSF is right – this is a new way to tax people, just like income taxes were when we introduced them. In 1894, Congress passed a federal income tax aimed squarely at the wealthiest Americans, and the following year the Supreme Court struck it down 5–4 in Pollock v. Farmers’ Loan & Trust. But that wasn’t the end of the story. Wisconsin’s voters amended their state constitution in 1908 to allow an income tax, the legislature passed one in 1911, and opponents immediately took it to court. In 1912, the Wisconsin Supreme Court upheld it. Wisconsin became the first state with an income tax that actually worked, and a model for the rest of the country. One year later, the nation ratified the 16th Amendment, and the federal income tax the Supreme Court had once called unconstitutional became the foundation of our tax system.
And the legal arguments for Prop 40 are quite strong – stronger than they were for an income tax when Wisconsin passed it. States have always had broad power to tax their own residents’ property and wealth. California already does it every year through property taxes and by taxing residents’ income from anywhere in the world. Prop 40’s authors, some of the country’s leading tax law scholars, anticipated every major challenge. Like Wisconsin’s, it’s a constitutional amendment, so it can’t be struck down for conflicting with the old state constitution. It excludes real estate, so it doesn’t run into Prop 13. It credits wealth taxes paid to other states, so no one gets taxed twice. And it’s not retroactive: it taxes fortunes as they stand at the end of 2026, the same way Prop 30 taxed income earned before voters approved it in 2012.
And Prop 40 being a new kind of tax is exactly the point. Right now, wealth has accumulated into the hands of a few at a scale that rivals the gilded age. This is leading directly to the death of our democracy because wealth at this scale is power. The billionaires aren’t using their extra billions to buy more yachts – the world can’t build enough yachts for that. Instead, they are using it to buy politicians. Elon Musk spent nearly $300 million dollars to buy an election for Donald Trump, and got rewarded for it by being appointed to run DOGE and gut our federal government. AI executives donated tens of millions to Trump to gut AI regulations. The list goes on.
Democracy cannot survive wealth concentration at these levels. The only way we can fix this is by taxing not just the incomes, but the wealth of the ultra-rich. If Prop 40 passes, it will ensure that wealth taxes on the ultra-rich are an issue in the 2028 Presidential primary and that gives us a path to passing a national wealth tax – something Gavin Newsom claims he wants! But if Prop 40 fails, it all but ensures taxing the wealth of billionaires dies as a national issue. Politicians will say: if even progressive California couldn’t tax the billionaires, how can the country?
This isn’t just an issue for our nation. It’s an issue for the whole world. There are wealth tax proposals in Germany, France, Spain and other countries. I’ve talked to people working on those proposals, and they have all told me: they are all waiting to see what happens in California. If we can win this fight against the billionaires, that fight will spread like wildfire across the world.
Right now, San Francisco matters for this. Prop 40 relies on San Franciscans coming out in droves to vote yes. San Francisco has always been home of the movements that have fought to fix what the nation is getting wrong. When police opened fire on striking workers on Bloody Thursday in 1934, San Francisco shut down the whole city in a general strike and we unionized the West. When trans women at Compton’s Cafeteria were tired of being beaten by the cops, they fought back and launched the movement for queer liberation right here in the Tenderloin. When the federal government refused to recognize disability rights, it was activists in San Francisco who occupied a federal building for nearly a month and forced them to.
With Prop 40, we have a chance for San Franciscans to go beyond just our nation. We can show not just the country, but the entire world, that it’s possible to go up against the wealthiest, most powerful people and win. San Franciscans can change the course of the future of the entire world.
Clear, concise and excellently written!
Saikat, this is a GREAT piece. Will forward it widely.