California Democrats—but Not Their Elected Representatives—Back the Billionaire Wealth Tax

Last night, Bernie Sanders was the featured attraction at a Los Angeles rally in support of Proposition 40, the onetime billionaire wealth tax on California’s November ballot. According to a late-September Los Angeles Times/UC Berkeley poll, 65 percent of the state’s Democrats back the measure, which has also been endorsed by the executive committee of the state party. Sanders was joined by other elected officials at the rally, including Rep. Ro Khanna and, well, Rep. Ro Khanna.

In fact, the response of ostensibly liberal California elected officials to the measure should go down in the annals of Profiles in Cowardice. The measure is the logical and necessary extension of tax progressivity, a defining goal of American liberalism since the late 19th century. Joseph Stiglitz and Paul Krugman were among the six Nobel laureates who endorsed Prop 40, and the measure was partly formulated by UC Berkeley’s star economists Emmanuel Saez and Gabriel Zucman.

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Like a rotten fish, the flight of California’s elected Democrats from Prop 40 stinks from the head: in this case, Gov. Gavin Newsom, whose political career has long been boosted by Silicon Valley fortunes. Newsom’s reluctance to rile his past, present, and (he hopes) future funders seems to have trickled down to the ranks of the elected. His certain successor as governor, Xavier Becerra, has joined Newsom in opposition, as has Los Angeles Mayor Karen Bass. The mayor’s challenger in the upcoming midterm election, L.A. city council member Nithya Raman—an ostensible socialist who is a member of DSA, which has backed her candidacy—has taken no position on the measure. This puts her to the right of actual capitalist Tom Steyer, the billionaire progressive who sought the governorship in the state’s June primary.

Despite the measure’s heavy support from rank-and-file Democrats, the only other elected Democrat of note to back Prop 40 is Rep. Judy Chu, who represents L.A.’s San Gabriel Valley in Congress. Subtracting Chu and Khanna from the quavering pack, that leaves 41 California Democratic members of Congress who’ve either opposed the measure or have remained mum on the subject. (Well, I suppose, 40—the redoubtable Maxine Waters has made pro-40 comments, but has not issued an endorsement per se.)

The silence of these sheep is in part the result of the measure’s formulator, Dave Regan of an SEIU health care local, who has a habit of using his union’s treasury to wage the signature-gathering campaigns that put proposals on the ballot, with no intention of (or resources for) actually funding campaigns for them once they qualify for the ballot. California media has been filled with reports on Regan’s history of using the leverage gained from such ballot measures to win unrelated gains for his union’s members: The Los Angeles Times ran a piece saying he’d offered to abandon the measure if Newsom helped him win contracts for his members at several hospitals—a report that Regan denied.

What this has meant, however, is that there’s been no media campaign for Prop 40, even as Silicon Valley’s oligarchs have funded an opposition media campaign to the tune of several hundreds of millions of dollars. The absence of a widely available public campaign for the measure has made it easy for so many Democratic electeds to stay mum on the subject.

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Indeed, such press coverage as has appeared has dealt with the checkered career of Regan more than with the measure itself. By contrast, profiles of the measure’s chief opponent—Google co-founded Sergey Brin, who’s thus far funded the opposition campaign to Prop 40 with $187 million of his wealth, which Forbes puts at $263 billion, making him number five on the magazine’s list of the planet’s richest people—have been comparatively few. An avid supporter of President Trump and all his works, Brin is thereby a considerably greater threat to the public weal and the American way of life than mere Dave Regan, but the growing specter of government of, by, and for oligarchs hasn’t registered in the Prop 40 discourse as much as Regan’s deals.

Brin has fled to the Nevada side of Lake Tahoe to escape the specter of a onetime 5 percent wealth tax that Prop 40 would impose, and Newsom has repeatedly said he fears the flight of Brin’s fellow billionaires (roughly 200 are Californians) would impoverish the state. The basis for such fears is questionable at best, however. Proposed tax hikes on the rich invariably produce grim warnings of millionaire flight which then don’t eventuate. Even if they did in this case, as a paper for the National Bureau of Economic Research (NBER) has documented, the revenue gain of roughly $100 billion that the wealth tax would yield wouldn’t be offset by reductions in the income tax revenue produced by the flight of every one of those 200 billionaires until 25 years had passed. If just 50 of those 200 billionaires fled, it would take a full century.

No suspense attends any of the races for statewide office in California this year; Democrats lead their Republican challengers by roughly 20 percentage points. It’s Prop 40 that hangs in the balance, its prospects dimmed by the cupidity of the state’s oligarchs, abetted by the timidity of these selfsame Democratic pols.

The post appeared first on The American Prospect.