California Billionaire Tax Fails as Hollywood Workers Lose Insurance Backstop

The proposal to tax California's wealthiest residents appeared destined to fail in the early hours of Wednesday, leaving a gap in healthcare coverage for thousands of entertainment industry workers. With approximately half of the votes tallied, the 'No' side maintained a lead of nearly 13 percentage points, a margin of roughly one million votes that made passage highly improbable.

The measure, designated as Proposition 40, would have imposed a one-time 5% levy on the state's estimated 200 billionaires. The revenue was earmarked for California's healthcare fund to counter federal budget cuts affecting Medi-Cal and other programs for low-income residents. For behind-the-camera personnel and freelancers who lack employer-sponsored insurance, the tax provided a potential safety net.

The battle for the ballot became one of the most costly in state history, with over $350 million spent. Opponents and their allies controlled more than 96% of that expenditure. High-profile figures such as Sergey Brin and Peter Thiel contributed heavily to the opposition campaign, framing the vote as a test of the influence held by the nation's ultra-wealthy.

Cheyenne Jackson, an actor known for roles in American Horror Story and Glee, described the current climate for performers as difficult. Last month, he launched a project called One Job Away to spotlight actors who are close to meeting the SAG-AFTRA annual minimum for health insurance. He reported receiving hundreds of inquiries from union members at risk of losing their coverage.

Data underscores the severity of the situation. A 2023 survey by the UC Berkeley Labor Center found that roughly 22% of workers in the arts, entertainment, recreation, and accommodation sectors were enrolled in Medi-Cal. Additionally, the Motion Picture Television Fund assisted over 1,100 low-income or uninsured industry workers in securing health coverage in 2024, often through state and national plans.

Despite the high stakes, the Hollywood industry remained largely quiet during the campaign. Ashley Craig, a volunteer for the group Patriotic Millionaires, noted that silence was the norm. Jackson referred to the industry's lack of collective action as the billion-dollar question, suggesting that necessary conversations still need to occur.

Governor Gavin Newsom emerged as a prominent opponent of the tax, arguing it might drive wealthy residents and businesses out of the state. Meta founder Mark Zuckerberg threatened to leave California if the measure passed. Steven Spielberg relocated to New York earlier this year, a move that fueled speculation about the tax, which counted intellectual property rights as taxable assets.

Other industry figures who could have faced the 5% levy include George Lucas, David Geffen, and Oprah Winfrey. Newsom's stance on Proposition 40 was consistent with his endorsement of Proposition 42, a billionaire-backed measure that is also leading in the polls. Proposition 42 would effectively prohibit many future wealth taxes.

The governor's opposition to the tax also cast a new light on his recent mediation in the lawsuit blocking Paramount's $110 billion bid for Warner Bros. Discovery. In August, Newsom said he was mindful of the deal's impact on the state's reputation. He stated that he took CEO David Ellison's threat to relocate out of California seriously, aligning his political posture with powerful figures who are increasingly active in state politics.