Will California’s billionaire tax proposal make it to ballots?

Hi and welcome to TechScape. Nick Robins-Early and Dara Kerr here, filling in for your usual host Blake Montgomery who is out on vacation. We’ll be talking about the fight over a proposed billionaire tax in California, the UK’s social media ban and SpaceX making a big buy in the AI arms race.

The California wealth tax showdown comes to a head this week. After gathering more than double the necessary number of signatures to qualify for the November ballot, there’s still uncertainty that the proposal for a one-time tax on billionaires will make it to voters this fall.

This comes even after back-room dealing last week that led the proposal’s proponents to drop the tax from 5% of the wealth of any California resident worth more than $1bn down to a levy of 2%.

Tech billionaires have been spending big and lobbying state lawmakers to block the measure. Silicon Valley moguls, including former Google executives Sergey Brin and Eric Schmidt, have donated tens of millions of dollars to Super Pacs aimed at defeating the proposal. Crypto titan Chris Larsen launched an attack ad in May called “Reckless”, which warns the tax “will backfire and hurt you”.

Other tech billionaires, like Google co-founder Larry Page, Meta co-founder Mark Zuckerberg and Donald Trump’s AI and crypto czar, David Sacks, have already fled California or are making moves to leave. And more have funded efforts to kill the tax, including Palantir co-founder Peter Thiel, Ring founder James Siminoff, DoorDash CEO Tony Xu and Stripe CEO Patrick Collison.

Gavin Newsom, the state’s tech-friendly governor, has vowed to quash the proposal. He has said such state-level wealth taxes “drive a race to the bottom” and will chase billionaires out of California and strip the state of revenue. The measure is backed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) as a means of funding California’s strained healthcare, food assistance and education programs.

Newsom has reportedly been whipping together a coalition to help him negotiate a deal with the union to withdraw the proposal before California’s secretary of state certifies it by a 25 June deadline. He’s yet to respond to SEIU-UHW’s proposal to back a one-off 2% tax.

David McCuan, a political science professor at Sonoma State University who studies the California ballot measure process, told the Guardian it was likely the union would continue talks.

“From the get-go, SEIU-UHW has designed this measure as a ‘gun-behind-the-door’ to negotiate a better deal,” McCuan said. Rather than “go nuclear in a ballot measure battle that can cost hundreds of millions of dollars, the goal has been to threaten to go to war”.

Tech billionaires are spending unprecedented sums in California races. Experts say it’s the tip of the iceberg

View image in fullscreenA mobile billboard outside Downing Street in London, displaying a message directed at the prime minister ahead of his decision on a proposed social media ban, on 11 June. Photograph: David Parry/PAThe UK presented its plans last week to ban children under 16 years old from using what the government deems as “high-risk” social media apps – a list that includes TikTok, Instagram, X, YouTube, Snapchat and others – while placing additional restrictions on the use of other tech platforms such as romantic chatbots.

While the policy is set to face judicial review, it is one of the most intensive bans of its kind by any democratic government and part of a growing movement to restrict children’s access to social media. Australia enacted a similar ban last year, with Canada introducing a social media bill to parliament earlier this month and European countries considering their own legislation.