The billionaires bankrolling a record wealth tax fight; Open AI's midterms war room

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Calder McHugh (0:34)

Hello, and welcome to Decoded by POLITICO. I'm Calder McHugh.

Christine Moy (0:37)

And I'm Christine Moy. Today on the show, Decoded by POLITICO has an exclusive analysis on exactly how historic the billionaire spending to defeat the wealth tax in California has been.

Calder McHugh (0:48)

Plus, OpenAI has opened a war room to combat AI-generated misinformation ahead of the midterms. We'll discuss the company's decision to implement more safeguards during election seasons.

So, Christine, I remember you and some of our other excellent California reporters talking about the California wealth tax last week. What's new in the world of Prop 40?

Christine Moy (1:13)

Yeah, we've been knees deep in the world of Prop 40, which is the wealth tax proposal that Californians will vote on election day.

And for some time now, just between the eye-popping sums that have shown up in campaign disclosures, and the high-profile names that have come off the political sidelines to help oppose the measure, I had an inkling that spending around it would be unprecedented in some ways and possibly even historic. And so I set out with my colleague, Sean McMinn, on the data team to put a finer point on exactly how historic the political engagement has been from the group of targets, California billionaires. What we found was pretty remarkable. The billionaires who have contributed to fight the wealth tax, many of whom made their fortunes in tech, have spent more opposing this measure than on any other California campaign in their history. So we found that this was indeed an unprecedented show of coordination and level of engagement from this group of billionaires. And the possibility of the wealth tax, which is, again, this one time, like 5% tax on the accumulated wealth of state billionaires rather than an income tax, has drawn more than $293 million from at least 30 California billionaires. And this is part of a broader political activation. $612 million has come in from 70 current and former California billionaires in this year's state elections. And nearly half of that has been to defeat Prop 40, either directly through groups that are spending against it, and also on supplementary measures that are seeking to invalidate the tax.

Calder McHugh (2:45)

Okay, so Christine, roughly $300 million is a lot of money to spend to avoid spending more money in the future. I'm curious how you came to that figure and what your methodology was behind some of this reporting.

Christine Moy (2:58)

Yeah, I worked with my great colleague on the data team, Sean. And we determined this with a deep dive into past campaign contribution records of current and recent California billionaires. Since some claim to have moved out of the state over the measure, and the ultimate nitty gritty of whether they did it on time or if they did it in a way that would comply with the measure will only be determined if it passes. And we also looked at those individuals spending the cycle on wealth tax-related committees and other state campaigns. And one of the reasons why we did this is because California's ballot fights are notoriously very expensive. In recent years, we've seen spending records broken by battles involving industries, including Uber and Lyft over Proposition 22, and the online sports spending industry over Propositions 26 and 27 in 2022

And what's different in this time is we are seeing individual billionaires and tech donors spending at levels that has been historically associated with entire industries.

Calder McHugh (3:56)

Yeah, I mean, it does feel like as somebody on the East Coast every year or two, you're hearing about these giant ballot measure fights, that there's just all of this money pouring in. But yeah, to your point, Christina, it feels like this is actually sort of individuals getting involved maybe in a new way. So who is actually donating this money?

Christine Moy (4:15)

So Google co-founder Sergey Brin is by far the opposition's biggest funding source. You know, he single-handedly donated more than $100 million through this new political group he formed called Building a Better California. That's been the primary vehicle for billionaire money against Prop 40 And they're also behind two other measures that are designed to prohibit certain new taxes and invalidate the wealth tax if they pass and get more votes. You'd recognize other top billionaire donors trying to stop the measure as well. You have former Google CEO Eric Schmidt, venture capitalist John Doar, Stripe CEO Patrick Collison, crypto executive Chris Larson. Those are the top donors. They each donated between $15 million and over $40 million trailing behind Brin in this measure. So one of the people we heard from was Frank Slootman. He's the board chair and former CEO of Snowflake. He's the Silicon Valley founded cloud data company that still has operations here, but moved its executive offices to Montana a few years ago. And he described himself as someone who was donating despite only having a moderate interest in politics. Historically, he said his political participation largely consisted of voting in elections. And indeed, we checked it out, he has no record of past campaign contributions in California. So he's very emblematic of one of the themes we've noticed with the donors, which is that it is a combination of established mega-donors and also individuals who before this year never really engaged in California politics.