B (3:10)

Okay, let's there with the unusual structure of it. Just explain what the measure would do.

C (3:17)

So this would place a 5% tax on the net worth of any billionaires who are California residents as of January 1st of this year. The money would go into a special fund at the state level and would have to be spent on health care services. It's unusual to tax the assets of a person as opposed to their income. So their assets would be, you know, their stocks, the jewelry they own, the cars in their garage, the paintings, anything that contributes to their wealth. Notably, it does not include residential property. So that's kind of an interesting exemption. And then it's also unusual on the revenue side to create a special fund where the money would go and that it could only be used for this one, one purpose. So unlike most of the tax dollars that the state collects, which go into what's called the general fund, and then the elected leaders of the state government decide how to spend it, this is requiring that 90% of it be spent specifically on healthcare.

B (4:35)

What does that actually mean? Like, does that go to the money that people are spending on their healthcare?

C (4:42)

The concept is that the supporters of this tax want to make up for the massive amount of funding that has been cut by the federal government through what Republicans called their big, beautiful bill. The cuts that were in that bill that Trump signed last year were related to Medicaid and Obamacare subsidies. And those health insurance programs pumped a huge amount of money into the healthcare system writ large. So for the supporters of this tax, they say this money is essential to keep hospitals open, to keep emergency rooms operating, and to keep the healthcare system that Californians rely on operating at the same level that it has been before these cuts go into place.

B (5:34)

So just to put a fine point on it, what's unusual about this initiative is that, one, it's taxing assets, and that's really different. Normally, the way people raise taxes on rich people is to tax. Tax their income. And the other thing that's unusual is that the vast majority of it, 90% of the money, would go to this one purpose, healthcare.

C (5:56)

Right. And this is happening in a state that has more billionaires than any other state. So the supporters of this tax say that it would affect about 200 people. However, there are, you know, various wealth management kind of experts that I've interviewed over the last few months. They've told me they think the number is probably higher. But right now, you know, no one has, like, an exact count on how many people would have to pay this.

B (6:26)

And so how has this been received in California?

C (6:31)

Well, you know, it got 1.5 million signatures. So there were at least that many people who liked the idea enough to sign a petition. You know, I've been out with different petition circulators watching this thing in public parks and in front of grocery stores. And the idea of taxing billionaires, especially when you just kind of say it in one sentence like that, it's real easy for people to sign on the dotted line. And polling shows that more than half of voters support it. More than 70% of Democrats support it in California. But even though it has a lot of support, seemingly from the public, there are a lot of high profile Democrats who have come out against it and a lot of unions who are just sitting on the sidelines. And some of that has to do with how this whole thing came about.

B (7:25)

Interesting. So how did it come about?

C (7:31)

This tax is being proposed by a specific union called the seiu. UHW stands for Service Employees International Union, United Healthcare Workers West. Kind of a mouthful. This union represents hospital workers, including janitors, cooks, some various healthcare technicians. And they're really concerned that the Medicaid cuts from President Trump last year are going to lead to widespread closures of ER rooms and hospitals in the places where they work. And the leader of the union is named Dave Regan. And he has a real long history of using ballot initiatives in his labor negotiation process. And he came up with this idea for this billionaire tax and teamed up with some very respected economists from different universities around the country and put this proposal together really on his own.

B (8:39)

Basically, this is coming from something like a maverick operator in the world of unions. And when he starts this thing, it's not like he's is a huge coalition behind him.

C (8:48)

Yeah, so they're working on building a coalition. They got the support of Bernie Sanders. He flew out to LA and led this rally that was really well attended and energetic. And the union started pouring millions of dollars into gathering these signatures. They trained a bunch of volunteers, and pretty much anyone who's been, you know, at a farmer's market or grocery store in California over the last few months has probably seen someone with a clipboard asking them for a signature on the billionaire tax.

B (9:18)

And my understanding is the billionaires did not respond well to all this momentum.

C (9:24)

So they started freaking out late last year in advance of this January 1st deadline, because the ballot measure says that anyone who was a resident of California on January 1st of this year could be subject to this tax. So at the end of the year, there was a lot of jockeying and there were a few pretty High profile billionaires who made moves to leave the state to change their official residency. A couple of the founders of Google relocated. Sergey Brin moved to the Nevada side of Lake Tahoe. Larry Page left for Florida. And then also some of the people who are really influential in the world of, you know, investing in technology left. David Sachs moved to Texas, and Peter Thiel moved to Miami.

B (10:17)

I have to say, this is always something that wealthy people threaten to leave at any prospect of a tax increase, but they don't always follow through. In this case, you're saying they actually did it.

C (10:29)

At least a handful of them did, you know, so they did relocate. A lot of them have multiple properties, so they still have homes in California, but they did change their official residence. And then meanwhile, the billionaires who want to remain in California have been plotting about how to adjust to this thing and, you know, how to basically mitigate or reduce their tax liability if it passes.

B (10:57)

By what, moving their jewels and boats and paintings and stuff. What are we talking?

C (11:02)

Yes, exactly that.

B (11:03)

Whoa.

C (11:03)

It was kind of wild. I went to this conference in Orange County a couple months ago where a bunch of tax advisors and wealth managers were meeting. And one of the sessions they had was basically kind of like how to help your clients reduce their net worth. So suggestions that were like, oh, move your Picasso out of your house in Beverly Hills to your house in Aspen, or if you were carrying more insurance than you needed on your wife's, you know, six figure diamond necklace, that just reduced the insurance policy to what it's actually worth because that's what you'll be taxed on. But to be fair, there are people who are just like, okay, fine, you know, we live in California. This state has been wonderful to us. If we have to pay more, we will.

B (11:55)

For those who are fighting it, what is their argument for why this tax is such a bad idea beyond just don't take my money, I want it.

C (12:07)

So they're really drilling into the specifics of the way that it's structured. Just the idea of taxing assets and the. A requirement that if this thing passes, you know, every taxpayer in California will have to declare if they are a billionaire or not. And then if so, they will have to declare the value of all of their property and assets. And so there are people who just feel that that is wrong. They're arguing that a retroactive tax, because it would tax people who are in the state as of January 1st is unconstitutional. And a argument from Silicon Valley is that this tax would absolutely devastate California's ability to continue dominating in the world of innovation.

B (13:00)

Their argument is basically that the state has a lot to lose from this tax, not just the billionaires.

C (13:07)

Absolutely. All of those billionaires who would have to pay this wealth tax on their assets, they already pay lots of income tax. And that income tax is what keeps most of the state of California running. It pays for schools and public safety and roads and all of the other things that the state funds. And that is one of the reasons that Governor Gavin Newsom is so vocally against this tax. He's very concerned about a short term bump in tax revenue from the billionaire tax, but a long term loss from that ongoing loss of income taxes from people who leave. Meanwhile, some of the most influential unions in the state, the teachers union, the umbrella group for seiu, they haven't publicly taken a position, and privately they're concerned about the idea of a tax that gets locked up in this special box and doesn't fund the programs that most tax dollars do. So there's a lot of different angles of potential concern. And that's also why many of the Democratic candidates who are running for governor have expressed some reservations. Even while they're saying, we think that rich people should pay more, they are raising concerns about the structure of this thing. Again, getting into the weeds about how the money is spent.

B (14:42)

So even though this initiative seems like it would go a long way toward establishing potentially a new precedent, a new way to tax the very rich and redistribute that money, things that these folks generally may agree with, they aren't on board. It seems like, in part because of the particularities of how this bill came about and who specifically benefits from it.

C (15:07)

Right. And so, depending on how far this thing goes, we may wind up seeing a situation where the billionaires luck out if they can form an alliance with other groups that are much more sympathetic to the voters. I also want to say that this thing has a lot of different potential outcomes. But there is the possibility here for a really strange bedfellows kind of coalition to come together.

B (15:58)

We'll be right back.

E (16:01)

This podcast is supported by the American Petroleum Institute. Energy demand is rising and the infrastructure we build today will power generations to come. We can deliver affordable, reliable and innovative energy solutions for all Americans. But we need to overhaul our broken permitting process to make that happen. It's time to modernize and build. Because when America builds, America wins. Read API's plan to secure America's future at permittingreformnow.org Most all in one HR

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B (17:31)

Laurel, you said it was possible that the billionaires could assemble a strange bedfellows coalition to fight this tax. Just talk about how exactly that would work.

C (17:43)

Well, I think we have to start off by acknowledging that there are a lot of chess pieces on this board and we just don't know exactly how it's going to play out. California has this ballot initiative system that a lot of political actors use as leverage to get what they want out of the legislature and the governor. And so now that this thing has qualified for the ballot, this is a period over the next couple months where there could be some backroom negotiations to try to get this thing off the ballot. Sergey Brin and the committee that he created, they have put money into a couple of ballot measures that would negate the billionaire's tax, and it's possible that those could be used as leverage. Perhaps Governor Newsom gets involved and he could try to help negotiate something that would keep this from going on the ballot. And then there's another path, which is these things all go on the ballot and they duke it out in front of the voters. And that would become a very expensive campaign season where voters are subjected to conflicting ballot measures on these tax issues.

B (19:10)

Let's talk about Newsom here, because I think he's in a really interesting position. On the one hand, it makes sense that a potential 2028 contender for the presidency doesn't want to alienate billionaires. But it would also seem perilous for him to stake out a position that, at least on the surface, might paint him as not wanting to tax the wealthy at this moment when economic populism is so potent. So talk to me about his motivations and the position he finds himself in.

C (19:46)

Well, I think you summarized it exactly right. And that's why when he does talk about this, he really focuses on his objection to a state specific wealth tax. And he does frequently say, we ought to have a conversation about a national wealth tax, leaving the door open to the idea of a wealth tax if it was applied evenly across the country.

B (20:15)

He's trying to thread a needle there. Right. He's saying, I'm not opposed to this thing, but I'm opposed to a version that puts California at a disadvantage. And the way to handle this is at the national level. That's the way to go about this.

C (20:28)

Right. Without fully committing that he would do it at the national level. But say if we were going to do it, that's what we should explore. And it is worth noting that he has opposed many wealth taxes in the past when they've come up in the California legislature. Legislature. The other thing he focuses on is that California has a very progressive income tax structure and the state does levy a lot of taxes on the wealthiest earners. And saying that he agrees with the moral argument to tax the rich, he's

B (21:02)

again threading the needle. Whereas on the more progressive side of the Democratic Party, you have people like Bernie Sanders saying, look, don't let the perfect be the enemy of the good here. Taxing billionaires is good. Maybe this isn't gonna solve all of our problems, solve inequality writ large, but overall we support this concept. Obviously, Bernie Sanders doesn't have to be the governor of California, but you see the contrast there.

C (21:29)

Exactly. And so for Bernie Sanders, who is deeply invested in the idea of taxing billionaires and, and fighting the oligarchy, the particulars are of less concern to him. The point is levying attacks on the people who have so much to help people who have less. He doesn't see any problem with that.

B (21:53)

What is the message, do you think, of this fight in California for other states that are pursuing populist policies like this? I'm thinking of New York, where Governor Hochul is proposing a pied a terre tax. Because on the one hand, this tax, you said, has a lot of support, and on the other, there is this very loud opposition that seems to be rooted in a fear of alienating billionaires or losing them because the state has become very reliant on these ultra wealthy people.

C (22:27)

Well, I think there's a couple lessons we can take away from this. One is that the idea of sticking it to the rich is very popular. The other lesson is that it's still really hard to pass and get across the finish line because of all of the particulars involved, because of the way that a tax is structured, and because of how influential the billionaire class is in our society.

B (22:55)

Right.

C (22:56)

The third lesson is that because it's so hard, people who want to do this kind of thing need a really broad base of support to push it across the finish line. And I think that is what we're going to be seeing in California that will be tested over the next few months, how strong the support is for this idea. Given how hard it is to go up against these opponents.

B (23:22)

Can I just step back and ask, given how imperfect this measure is, why have the billionaires been so freaked out about it? Because from what you said, it sounds like it may have actually been relatively straightforward for them to move some of their wealth elsewhere for a single year. It's also just a 1 time 5% tax. So what about this proposal is so scary to them?

C (23:53)

For the billionaires and also many tech leaders who are not billionaires but who are aspirational, they see this as a kind of an existential threat, that it really would set a precedent of going after the wealth that people have earned and taxing their possessions in a way that really has never been done before. On the other side, that is also part of the motivation for this thing to really shift the paradigm in how the government taxes wealth and how the government gets people to contribute to society. And in a time when many wealthy people have shifted their assets into various accounts for tax dodging, that this would be another way to go after the real wealth that people have and try to provide more for people in society who have so little. I think this measure is forcing a lot of people into the uncomfortable territory of reckoning with the moment we're in. It's pushing the whole anxiety about the billionaire class and economic inequality right to the forefront.

B (25:28)

Well, Laurel, thank you so much.

C (25:31)

Thanks for having me.

B (25:50)

We'll be right back.

E (25:58)

This podcast is supported by the American Petroleum Institute. Energy demand is rising and the infrastructure we build today will power generations to come. We can deliver affordable, reliable and innovative energy solutions for all Americans. But we need to overhaul our broken permitting process to make that happen. It's time to modernize and build, because when America builds, America wins. Read API's plan to secure America's future

A (26:26)

at permitting reformnow.org the right technology can strengthen human judgment. That's why Deloitte brings together AI and data analytics with multidisciplinary teams who can help you connect the dots across your enterprise from risk to operations to customer needs. So opportunities don't slip by and surprises don't spread. Because the smarter your systems, the sharper your instincts. That's how technology makes people better at what they do best. Deloitte Together makes progress. Learn more@deloitte.com TogetherMakesProgress this podcast is supported by Select Quote Select Quote believes that, as complicated as it can seem, life insurance can play an important role in planning for the future. That's why, for more than 40 years, SelectQuote has helped millions of families compare options from trusted insurance carriers nationwide. Selectquote can help you find the right policy for your needs in as little as 15 minutes. And some policies can take effect the day they're taken out. To learn more, visit selectquote.com thedaily that's selectquote.com thedaily

B (27:33)

here's what else you need to know today.

D (27:35)

Earlier today, a grand jury in the Eastern District of North Carolina returned a true bill indicting Mr. James Comey with committing two felonies.

B (27:47)

The Trump administration has secured a new indictment against one of the president's biggest enemies, former FBI Director James Comey. Months after its last indictment against Comey

D (27:58)

ended in failure, he knowingly and willfully making a threat to take the life of and to inflict bodily harm upon the president of the United States. Count two.

B (28:08)

This time, the Justice Department charged Comey with making a threat against Trump because of a photo Comey shared on social media of seashells arranged on a Beach to say 86 47. Since 86 can be slang for removing something, and Trump is the 47th president, allies of the president have construed the photo as a threat to kill Trump.

D (28:33)

Threatening the life of the president of the United States will never be tolerated by the Department of Justice.

B (28:40)

Comey has repeatedly denied threatening to harm the president.

D (28:44)

I'm still innocent, I'm still not afraid, and I still believe in the independent federal judiciary.

B (28:51)

So let's go and Mr. Speaker, their Majesties King Charles III and Queen Commander. In a speech to Congress on Tuesday, King Charles delivered an optimistic assessment of the relationship between the US And Britain at a moment in which that relationship is arguably at its lowest point in decades.

D (29:12)

With a spirit of 1776 in our minds, we can perhaps agree that we do not always agree.

B (29:21)

In his speech, Charles declared that disputes between the two nations have defined their shared history, dating back to the American Revolution against Britain in the 1770s.

D (29:33)

Indeed, the very principle on which your Congress was founded, no taxation without representation was at once a fundamental disagreement between us and at the same time a shared democratic value which you inherited from us. Ours is a partnership born out of dispute, but no less strong for it.

B (29:57)

After the speech, President Trump hosted Charles and his wife Camilla for dinner at the White House.

D (30:03)

Before we really begin, I want to congratulate Charles on having made a fantastic speech today at Congress. He got the Democrats to stand. I've never been able to do this.

C (30:16)

I I couldn't believe it.

B (30:19)

Today's episode was produced by Olivia Natt, Shannon Lynn, Claire tennisgetter and Jack Desadoro. It was edited by Paige Cowett and Patricia Willins. Contains music by Marion Lozano. Our theme music is by Wonderly. This episode was engineered by Chris W. That's it for the Daily I'm Natalie Kitroweth. See you tomorrow.

E (30:56)

This podcast is supported by the American Petroleum Institute. Energy demand is rising and the infrastructure we build today will power generations to come. We can deliver affordable, reliable and innovative energy solutions for all Americans, but we need to overhaul our broken permit process to make that happen. It's time to modernize and build, because when America builds, America wins. Read API's plan to secure America's future at permitting reformnow.org.