Can Billionaires Pay if Their Wealth Is in Stocks or a Business?

VOTE YES ON PROP 40

Vote Yes on Prop 40. Read the actual payment options before accepting the claim that valuable ownership makes a billionaire unable to contribute.

The facts at a glance

Publicly traded assets and private-business interests have different valuation provisions. [1]

Specified private-business presumptions can be rebutted using evidence and a certified appraisal. [1]

The statute does not require billionaire taxpayers to liquidate all holdings immediately. [1]

“Not cash” does not mean “no value”

The measure uses fair market value as its general standard and gives specific rules for different assets. A publicly traded share can have a market price even if its owner has not sold it. A nonpublic ownership interest may need a different valuation method. [1]

The relevant questions are the value of the covered asset and how the taxpayer can pay—not whether the asset was already sitting in a bank account. Mixing those questions makes the proposal sound less specific than it is.

Publicly traded stocks use the public-market rule

Section 50303(c)(1) governs publicly traded assets. The default valuation is based on market prices at the valuation date. A separate private-business presumption should not be substituted for that rule when describing a person’s public stock holdings. [1]

The Galle–Gamage–Saez–Shanske memo on controlling shares addresses this distinction directly. It explains the authors’ interpretation of the relevant provisions, including the difference between voting control and the value of the covered interest. It is cited as a drafters’ explanation, with the actual statutory language linked beside it. [2]

Private interests have an evidence-based rebuttal route

For the nonpublic business interests covered by section 50303(c)(3), the statute supplies presumptions based on ownership and business information. It also permits a taxpayer or the board to show, with clear and convincing evidence, that specified presumptions substantially overstate or understate the value or percentage owned, and use a certified appraisal instead. [1]

That does not mean a taxpayer can choose any lower number. It means the proposal includes a mechanism for documented valuation disputes. The existence of a presumption is not the same as an irrebuttable assessment. [1]

Payment can be spread out

The standard option is five equal annual installments of principal, with interest accruing on deferred or unpaid balances. A separate optional deferral account is available under specified conditions for taxpayers whose liability exceeds the relevant publicly traded assets. [1]

Neither option guarantees that no owner ever sells an asset. Both are directly relevant when someone claims that the measure demands an immediate all-or-nothing liquidation of assets. The statute does not impose that universal requirement. [1]

The same system includes enforcement

The Franchise Tax Board has examination duties, and the measure includes appraisal, administration, and penalty provisions. Its rules also address trusts and debts so that covered wealth is not defined simply by whatever number a taxpayer chooses to report. [1]

The policy choice is whether billionaire wealth should contribute to essential care under a defined set of rules. Our answer is Yes. Technical details should help explain that choice—not obscure the fact that the proposal has valuation and payment mechanisms at all.

A few more answers

The people and institutions behind the evidence

Keep reading

CHECK THE EVIDENCE

Sources behind this page

Each reference identifies what it establishes. A cited agency or researcher is not automatically a campaign endorser.

Vote Yes on Prop 40.

Vote Yes on Prop 40. Just because vast wealth is held in ownership interests and not cash is not a reason to abandon the people who need healthcare.

Help pass Prop 40 →   Explore all topics →