California Billionaires Win State Initiative To Raise Taxes On Themselves
As the rest of the country held its breath for Ohio and the results of the electoral college on Tuesday night, a number of California billionaires eyed ballot initiatives that hit a little closer to home.
In California, a number of superrich residents gave to support or defeat statewide propositions, among them a tax increase for wealthy individuals to prevent funding cuts to public schools. That initiative, Proposition 30, passed with a 53.9% vote in a race that saw billionaire donors give stunning amounts on both sides of the issue.
In an election that was, in part, defined by the massive amounts given to candidates and voter measures, California provided a case study for money’s influence on politics. Below are the results of several voter initiatives from the Golden State that were either backed or opposed by billionaires.
Proposition 30: Temporary Taxes to Fund Education
The brainchild of California Governor Jerry Brown, Prop. 30 was put on the ballot–and passed by voters–to prevent spending reductions to education programs. As promised by Brown, it will raise the state income tax on individuals making more than $250,o00 annually over the next seven years and raise the state sales tax slightly. For individuals in the highest tax bracket with taxable income over $1 million, the state income tax rate will rise to 13.3 percent from its current 10.3 percent.
The list of the biggest individual supporters of Prop. 30, which raised $69.5 million according to research organization MapLight, reads like a roll call of some the Forbes 400′s most liberal members. Among the billionaire supporters; venture capitalist John Doerr, Salesforce.com CEO Marc Benioff, Qualcomm founder Irwin Jacobs, David Geffen, Steven Spielberg, and Stewart and Lynda Resnick. Those donors combined gave more than $300,000 in favor of the initiative.
While fewer members of the superrich donated to defeat Prop. 30, they donated significantly more in a losing effort. Opposition groups to the initiative raised $53.4 million, including more than $35 million from Charles Munger Jr., the son of billionaire Charles T. Munger Sr. (Munger Sr. is vice chairman under Warren Buffett at Berkshire Hathaway). Other billionaire supporters included Charles Johnson, the chairman of mutual fund firm Franklin Resources and the largest shareholder in the San Francisco Giants baseball team; former Hollywood mogul Jerry Perenchio; cellphone entrepreneur Craig McCaw; and venture capitalist Mark Stevens.
“It’s easy for politicians to call out the welathy and say they’re only paying taxes at a certain rate,” said former Sequoia partner Stevens in an interview before the election. “At a national and a state level, the wealthy carry an inordinate amount of the overall tax burden.”
Proposition 32: Political Contributions by Payroll Deduction
Prop. 32, which failed on Tuesday, was meant to prevent unions and corporations from deducting money from employees’ paychecks for political purposes. Seen by opponents as having potentially crippling effects on the political influence of unions, the initiative counted billionaire Perenchio, who gave $1.3 million, and Charles Munger Jr., who gave more than $36 million, as its biggest backers.
Reports also linked billionaire brothers David and Charles Koch, through their American Future Fund, to the proposition as well. American Future gave $4 million to support Prop. 32, which lost. Only 43.9% of voters supported the proposition.
Proposition 33: Auto Insurance Prices Based on Driver History
Prop. 33, another losing measure, would have allowed insurance companies to set prices based on a driver’s history of coverage. The initiative was backed almost solely by Mercury Insurance billionaire George Joseph, who gave $16.9 million of the $17.1 million behind the measure. Joseph’s contribution, despite being significantly more than the $275,000 raised by opposition groups, was for naught as Prop. 33 lost with only 45.4% of the vote.
Proposition 38: Tax for Education. Early Childhood Programs
Directly opposing Prop 30., Prop. 38 would have raised taxes across almost all tax brackets to generate revenues for K-12 schools. The initiative, which was voted down by Californians, was funded solely by Molly Munger, the daughter of Charles Munger Sr., who gave more than $44 million of the $47 million that supported the measure. Joseph also gave $195,000 to Prop. 38 in a losing effort where Prop. 38 garnered a meager 27.7% of the vote.
Proposition 39: Income Tax Increase For Multistate Businesses
Hedge fund billionaire Tom Steyer put $30 million toward Prop. 39, which closes a loophole that lets multistate businesses choose where they want to pay a tax. True to Steyer’s ongoing commitment to advancing green energy initiatives, some of the funds raised by the increased tax payments will go toward energy-efficiency and clean energy retrofits at schools and public buildings in California. Prop. 39 won with 60.1% of voters supporting it. Steyer announced a few weeks ago that he will be leaving Farallon Capital, the hedge fund he founded 26 years ago, at the end of the year, to devote more time to service and philanthropy. Expect Steyer to become even more involved in California politics.