- Building a Better California, bankrolled by Sergey Brin and other billionaires, has raised about $318 million since forming earlier this year and expects roughly $350 million by Election Day. Most is directed at defeating Proposition 40, which would impose a one-time 5% tax on California billionaires to fund healthcare shortfalls tied to federal cuts.
- The arithmetic explains the spending. Ripple co-founder Chris Larsen, one of the donors, is worth $13.3 billion according to the Bloomberg Billionaires Index, so a 5% levy would cost him in the region of $665 million. The entire opposition campaign is roughly half that. Brin has personally given $102 million.
- The funding gap is eight to one. Groups fighting the measure have raised eight times what supporters have mustered, and across all three related ballot campaigns both sides have raised $320 million. Opponents have spent over $73 million on advertising including future reservations.
- Opponents are also backing two competing measures, Propositions 41 and 42, which could undercut the wealth tax even if voters approve Proposition 40.
What Happened?
Other contributors include venture capitalist John Doerr, former Google chief executive Eric Schmidt, and Stewart Resnick of The Wonderful Co, the main backer from outside technology. Larsen argued that rather than resenting billionaires, the better approach is keeping them in California where they already pay the highest taxes in the country. Supporters argue states cannot afford not to tax wealth that has grown far faster than ordinary incomes; opponents say the measure will prompt the wealthy to leave. Billionaire funders are staying off the advertising themselves, with ads instead featuring teachers, firefighters, carpenters and Planned Parenthood affiliates, politicians including Governor Gavin Newsom, and a woman claiming a hidden loophole could extend the tax to savings accounts, 401(k)s and home equity. Supporters’ first television ad features Senator Bernie Sanders. Ballot strategist Brandon Castillo noted that on the opposing side you only need to create scepticism about one small part of a measure. Political scientist Thad Kousser said the spending may set a record in a state where those records are already high. The campaign has surpassed California fights over rent control and redistricting but remains below the roughly $460 million spent on sports betting initiatives in 2022.
Why It Matters?
The spending asymmetry is economically rational rather than exceptional, and understanding why matters for anyone anticipating similar fights elsewhere. A one-time 5% levy on a group whose combined wealth runs to hundreds of billions creates liabilities that dwarf any campaign budget, so contributing tens of millions to defeat it is a straightforward calculation for each individual donor. That is why the funding runs eight to one and why it will in every comparable contest. The structural advantage Castillo describes compounds it: defeating a ballot measure requires only doubt about one provision, which is why the advertising focuses on a claimed loophole reaching ordinary savings rather than on the merits of taxing billionaires. The liquidity question is the one most relevant to readers and neither side addresses it directly. A one-time 5% levy must be paid in cash, while billionaire wealth is overwhelmingly held in concentrated, often illiquid positions, so the tax forces sales. Ray Dalio has argued that mechanisms compelling unrealised gains into cash are among the triggers that end asset bubbles, which makes the design of these measures a market consideration rather than only a fiscal one. The same issue arises in Hungary, where a wealth tax takes effect in January 2027 assessed on end-2026 valuations, at 1% above roughly $3.1 million and 1.5% above $310 million. The direction of travel is consistent across jurisdictions even where the structures differ. For advisers with California clients, the practical point is the assessment mechanics if it passes, and the competing propositions that could modify it even then. This is information rather than advice and specifics require qualified counsel.
What Next?
Election Day is less than a month away and polling shows a close race despite the funding gap. Watch Propositions 41 and 42 alongside 40, since the outcome depends on all three rather than one. Advertising costs rise in the final three weeks as other campaigns compete for attention, which favours the better funded side further. If the measure passes, the valuation and payment mechanics are what determine the market effect, particularly how concentrated equity positions would be liquidated. For the wider debate, a California result either way will shape whether New York, Sweden and others proceed, and Hungary’s experience from January 2027 will provide the first real data on whether wealth taxes raise what they project.
Affected Tickers and Coins: CMF
Source: Bloomberg
