Is the California Wealth Tax’s Sponsor a Plausible Argument Against It?

Otto von Bismarck, the late-19th-century chancellor of Germany, was no friend of the left. In 1878, he had the nation’s parliament outlaw Germany’s social democratic party and more than 300 unions for a 12-year period.

He also sought to diminish the appeal of the social democrats by adopting some of the policies they’d been advocating. He had Germany enact old-age insurance, accident insurance, and health insurance, making it the first nation to create a welfare state. All the while, Germany remained a state dominated by the military, a rising group of industrial oligarchs, and the reactionaries around the kaiser.

In consequence, the global left recoiled at Bismarck and has never since supported old-age insurance, accident insurance, and health insurance.

Not.

I make this point because we can see the consequences of this kind of rejection—opposing a good program because of its sponsorship by a less-than-good man—working out in real time right now in California. The ballot measure that would create a one-time wealth tax for the state’s roughly 250 billionaires has divided the state’s Democrats, in part because of what many regard as its dubious progenitor, Dave Regan. The head of a health care worker union whose resources he frequently devotes to putting all manner of initiatives on the state ballot, Regan has often used the threat of such initiatives to win benefits for his members. After his union funds the signature-gathering required to win ballot status, however, it invariably has no funds left to campaign for the measure; the leverage it gains from the measure’s existence is what matters to Regan. (In the case of the wealth tax, there have been reports that he offered to withdraw it if Gov. Gavin Newsom would help the union’s organizing and contract battles at several hospitals; Regan denies those reports.)

Most of the measures Regan has placed on California ballots have dealt with matters of exquisite narrowness, such as chiropractic practices that affect his members. With the wealth tax, the proceeds from which would go to replacing the Medicaid dollars slashed by President Trump’s One Big Beautiful Bill and thereby keep some of his members from losing their jobs, he stumbled into an issue of almost cosmic importance, at least when it comes to beginning to repurpose the trillions (yes, trillions) of dollars that have been redistributed upward since the late 1970s. (The RAND Corporation calculates that the shift in income away from workers since then comes to a tidy $79 trillion.) This shift of income has not only diminished the incomes of American workers, but also the government’s financial capacity to intervene when essential markets (like, say, health care) become largely or entirely unaffordable to millions of our compatriots. This latter problem is a consequence of our tax structure, in which the wealthiest Americans routinely pay income taxes at rates far lower than those of the average American taxpayer, and in which their wealth isn’t taxed at all.

Regan’s normal modus operandi—getting a measure on the ballot but having no remaining resources to campaign for it—has proved disastrous this time around, as a handful of California’s billionaires have spent nearly half a billion of their dough on an all-media campaign against it. They’ve also funded two of their own ballot measures that seem to address other topics but also contain all-but-invisible provisions that would negate the wealth tax even if it passed.

Regan also ignored the objections of at least one major union, the California Teachers Association, that his measure—Proposition 40—might make it harder to win voter approval for another measure that would renew the highest bracket of the state’s income tax, 40 percent of the proceeds from which go to the state’s K-12 schools.

Crucially, Newsom, who has relied on tech billionaires to fund his ongoing political career, opposed Prop 40 on the unproven grounds that it would lead to billionaire flight, and many leading Democrats and organizations that normally support Democrats (not just the CTA but a few other unions, Planned Parenthood, and other normally liberal groups) followed Newsom’s lead. Regan’s local, which has a little more than 100,000 members, is still just one part of SEIU, which has more than 700,000 members statewide. His rocky relations with his fellow California SEIU leaders, who allege all manner of bad conduct on his part, have led those leaders to refuse to back the wealth tax.

Despite this reticence from the top, rank-and-file members of these organizations—the state Democratic Party’s executive committee, the staff of California Planned Parenthood, the CTA-affiliated United Teachers Los Angeles, the rank-and-file teachers whom polling shows heavily support this measure—have managed to overlook the Case of Dave Regan’s Shortcomings. Instead, they’ve concluded that enacting the wealth tax would fire a shot heard ’round the world to wrest America from its looming oligarchy and give its government the capacity to actually address pressing needs. I doubt the Case of Otto von Bismarck’s Shortcoming has occurred to many, if any, of them, but it certainly gives them a precedent to lean on: It’s not the sponsor that matters; it’s the substance.

Words to live by.