Prop 40's one-time billionaire tax faces doubts it will stay one-time, and its receipts would swing with the market

A flat 5% levy that raises $100 billion has to land on roughly $2 trillion of billionaire assets ^[19]. The rate is fixed, so the payment moves one-for-one with what those assets are worth when they are valued. A 20% fall in billionaire wealth before that point would take $20 billion off the union's estimate ^[21]. For scale, California's top 1% paid more than $60 billion in state personal income tax in 2021, a year when stocks soared ^[3]. The one-time haul is at most about 1.7 times that peak-year bill ^[20].

The worry about volatility and the warning about a Trojan horse are one argument. The income tax already carries market risk every year, because the richest residents' incomes rise and fall with stock prices ^[1]. When the market fell during the financial crisis, the state ran deficits ^[4]. A single 5% levy adds one large payment priced off one market, once. It makes the base more volatile only if it recurs, and recurrence is what opponents mean when they say the tax will eventually come for all Californians ^[24]. Critics add that it would reach unrealized capital gains and the privately held stock startups depend on ^[25].

If Prop 40 loses, or a rival measure nullifies it, neither the revenue nor the risk arrives, and a Public Policy Institute of California poll found majority support for all three measures ^[17]. Should it pass and stay one-time, the state gets one market-timed payment and an income tax as top-heavy as before. A pass followed by a repeat would give the budget a second stream tied to asset prices.

Courts have gone both ways when lawmakers amended voter-approved measures, CalMatters reported ^[8]. In 1995 the state Supreme Court allowed changes that advance voters' intent "by any reasonable construction" ^[9]. In 2019 the Third District Court of Appeal threw out an amendment to the Political Reform Act because it "directly conflicts with a primary purpose" of the law ^[10]. I think turning a one-time act into an annual one sits closer to the 2019 case, so the legislative route to recurrence is narrow. The open route is the ballot, since nothing stops a future initiative from taxing wealth again ^[23].

The counter-case runs through spending. The union says the money would help offset federal cuts to health spending ^[6]. If those cuts outlast one payment, the gap reopens once the $100 billion is spent. A health program left short of money would be the strongest case for a second levy, at the ballot or in Sacramento. My view is also wrong if a court reads the act's purpose clause as loosely as the 1995 court read voter intent, because lawmakers could then stretch the tax without going back to voters.

Measured against the union's estimate, the more than $100 million Google cofounder Sergey Brin has put toward defeating the tax ^[14] is about a tenth of a percent ^[22]. Nvidia CEO Jensen Huang said he is "perfectly fine" with it ^[18].