California voters rejected Proposition 30, a 2022 ballot measure that would have raised the state’s top tax rate, already the highest in the nation, to more than 15%. But even though more than 57% of Golden State voters rejected this tax increase, they will be asked to consider a similar measure in less than two years.
That’s because another ballot initiative to raise California’s top income tax rate has qualified for the 2024 general election ballot. especially. That ballot measure, officially titled the California Pandemic Early Detection and Prevention Initiative (referred to here as the Pandemic Prevention Tax), would impose a top tax rate of 14.05% on state revenue, up from 13.3%, on amounts over $5 million. This new higher rate will remain in effect for 10 years.
Qualifying for the statewide ballot in the nation’s most populous state is an expensive undertaking and the PPT has accomplished that task with ‘the financial support from Guarding Against Pandemis (GAP), a non-profit human rights organization established and, for several weeks. ago, led by Gabe Bankman-Fried, brother of former FTX CEO Sam Bankman-Fried. Gabe Bankman-Fried stepped down as GAP’s director on November 14, three days after FTX filed for bankruptcy.
In April, the Los Angeles Times reported that Gabe Bankman-Fried “raised $12 million from a cryptocurrency trading company founded by his brother, Sam Bankman-Fried” to help raise taxes on the ballot. Of the $18.5 million in campaign contributions for PPT, $12 million represents 64% of total contributions. The money GAP spent to get PPT on the California ballot reduces federal spending, not Sam Bankman-Fried’s political donations.
The income tax increase that Californians will vote on in 2024 is not the first tax increase campaign sponsored by an organization that Bankman-Fried has funded. In 2021, GAP spent nearly half a billion dollars seeking a ballot measure that would raise Denver’s local drug tax by 27%, from 5.5% to 7.0%. . That tax increase was defeated in November 2021, with more than 60% of Denver voters rejecting the measure.
“The pandemic watchdog spent more than $1 million lobbying Capitol Hill and the White House last year, hiring at least 26 lobbyists to advocate the draft of the two measures is still pending in Congress and other issues, and aired advertisements supporting existing legislation pandemic preparedness funding,” The Washington Post reported on November 16. “Protect Our Future, a political action committee backed by the Bankman-Fried brothers, spent about $28 million this congressional cycle among Democratic candidates ‘who will champion the prevention of infectious diseases,’ according to the group’s website.”
The PPT has already received endorsements from prominent California politicians, including Democratic US Senator Alex Padilla and Democratic Senator Richard Pan, chairman of the California Senate Health Committee. This writer reached out to the two legislators to ask if the realization that the PPT may be partially supported by the profits of the former FTX CEO has made them reconsider approving it. Senator Padilla & Pan have not yet responded, but if he or any of his staff respond to this question, this article will be updated to include it.
The fact that PPT can qualify for the ballot with the help of millions of dollars in ill-gotten gains is the kind of thing that can poison the funnel of potential support. progressive tax hikes, even in deep blue states like California. . Those who took over GAP after the departure of Gabe Bankman-Fried have announced their intention to move forward despite the controversy surrounding the organization’s founder.
“Despite the uncertainty about the future of the GAP, the effort to prevent an epidemic worse than Covid-19 is very important and we hope that it will continue in a different way,” Keenan said. Lantz, GAP’s new interim executive director, in a statement. Lantz said he is “proud” of GAP’s work and hopes the “method” of preventing the spread of the disease will continue. When contacted by this writer for further comment, GAP staff did not respond.
When he came out against Proposition 30, the tax increase on the 2022 ballot, Governor Gavin Newsom pointed out that it would make California’s famous collection of revenue less recognizable. Governor Newsom has yet to take a position on the PPT, but like the Proposition 30 tax hike, the passage of the PPT will make California’s tax collection unstable.
According to IRS data, more than 83,000 sole proprietors, LLCs, S Corp and partnership owners across California earned more than $1 million in income in 2019, the year last available. While the IRS data doesn’t specify how many of those 83,000 small business owners have income over $5 million, it’s safe to assume that thousands of small business owners across California will be affected by the tax increase that will appear in 2024.
Critics of the PPT say it will increase the migration of employers and taxpayers, especially high-wage workers, from California to other states. “That’s exactly why we’re seeing significant flights from California and why rich people like Elon Musk are moving to states like Texas and Florida,” said Jon Coupal, president of the Howard Society. Jarvis.
Opposition from unions and Gov. Newsom could completely destroy PPT’s chances in 2024, as happened with Proposition 30 in 2022. and Bankman-Fried, together with the way that the PPT could have a negative impact on small businesses, is enough to keep the top income tax increase in 2024, even in even left-leaning states like California.