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Episode 11

California's Billionaire Tax (Prop 40), SEIU-UHW's Ballot Machine, and the Valuation Trap

Corrections 6

The audio and transcript stay exactly as recorded. Where Eve got something wrong, the line is marked and the correction, with its source, opens right under it.

  • 3 wrong
  • 3 overstated
  1. 9:03WrongThe section is §50303(c)(3)(C) of the Revenue and Taxation Code (Part 27, added by Prop 40), not "fifty thirty-three" (5033). The rule is described correctly: for interests that confer voting or other direct control rights, the ownership percentage is presumed to be not less than the taxpayer's percentage of those rights.
  2. 9:03WrongUnder §50305(c) the Franchise Tax Board may, at its discretion, penalize the appraiser when an underpayment of tax is attributable to a substantial or gross misstatement of value in a certified appraisal. The penalty is capped at 2% of the understatement of tax for a substantial misstatement and 4% for a gross one: a share of the tax understated, not of the valuation discrepancy, and not triggered just because the board disagrees.
  3. 19:34WrongNorway's wealth tax is about 1% above NOK 1.9 million per person in 2026 (0.35% municipal plus 0.65% state, rising to 1.1% above NOK 21.5 million). That was about $203,000 at Norges Bank's rate on 23 Oct 2026, the day before we recorded, not roughly $150,000. The lower figure fits earlier years at a weaker krone: the NOK 1.7 million threshold of 2022–2024 was about $149,000–$161,000 in 2023–24, and 2025's NOK 1.76 million was about $153,000 in January 2025. The tax is long-lived rather than stable: it has been levied nationally since 1892, but the threshold was NOK 750,000 in 2012, and the rate was cut from 1.1% in 2013 to 0.85%, then raised to 0.95% in 2022 and 1.0% from 2023. Nor does it fund a big chunk of the welfare state: it raised NOK 32.2 billion in 2024, 1.5% of Norway's tax revenue and 0.6% of GDP (OECD), or about 1.3% of public spending (NOK 2,532 billion, SSB); Norway's tax commission puts it at about NOK 35 billion in 2026. And it comes with real drama: the commission calls it one of the issues where the parties are most clearly divided and says the emigration of wealthy people has been a central theme of the tax debate; 46 people worth over NOK 100 million or on Kapital's rich list moved abroad in each of 2022 and 2023, against 16 in 2021.
  4. 0:16OverstatedBecerra, Porter, Villaraigosa and Mahan had come out against Prop 40 by January 2026, but not every major Democratic contender did. Tom Steyer, a Democratic primary contender for governor whom Eve listed as a supporter earlier in the same turn, backs it: his 2026-10-16 ballot guide reads "Prop 40 · YES" and calls it "better than nothing."
  5. 18:01OverstatedSaez co-wrote the drafters' expert report with Brian Galle, David Gamage and Darien Shanske, but we found no statement in which he says Prop 40 was designed as a template for other states. Asked by Roosevelt Forward (26 Jun 2026) how he would judge its success, he named the revenue collected and no harm to California's tech sector, then said: 'If the first two materialize, the third measure of success will indeed be adoption by other states and countries.' His NBER paper with Jasper Boll and Gabriel Zucman says the same thing as a prediction: if it passes and is implemented, it 'will likely increase the likelihood of similar initiatives in other states'. He hopes and expects it to spread if it works; he did not say it was built as a template to copy.
Show more corrections 1
  1. 19:34OverstatedStocks were taxed: the Senate report says the ISF's base was « l'ensemble des biens, droits et valeurs » held by the household. But it fully exempted business assets used in the owner's own work (« biens professionnels », the « outil de travail ») and art, and allowed 30% off the main home, so it did not tax all assets or all business equity. The Senate gives a 2017 yield of €4.2bn net and €5.5bn gross, so 'about five billion' is roughly right. The €60bn has no primary source; the closest match is a 2010 Capital magazine estimate of capital that may have left France since 1982, not a yearly cost. The ISF was abolished by art. 31 of loi n° 2017-1837 and replaced from 1 Jan 2018 by the real-estate-only IFI.
Fixed in our episode copy 3

These errors were only in the summary, topics or feed text, not said on air. The copy has been corrected.

  • Prop 40's drafters include Emmanuel Saez and tax law professors Brian Galle, David Gamage and Darien Shanske. Gabriel Zucman isn't a drafter: he co-wrote revenue-estimate research the drafters cite (Boll, Saez & Zucman). The section is §50303(c)(3)(C).I didn't say this on air, but our pages credited Prop 40 to Saez and Zucman. Zucman didn't draft it: Saez's co-drafters are tax law professors, including Galle, Gamage and Shanske, which is what I meant by "the tax professors" in the episode. My point that the valuation floor is deliberate design stands.
  • The drafters' Section-by-Section Summary of Prop 40 (21 Sep 2026) does show that the voting-control floor was deliberate: it says the presumption 'addresses a tax planning technique common in the context of the estate tax' and 'does not apply to interests in publicly traded entities.' But it says nothing about a national template or other states, and it was 'prepared by the drafters of Proposition 40', not by Saez alone: he is one of four, with Brian Galle, David Gamage and Darien Shanske. Saez has framed adoption elsewhere only as a hoped-for result if Prop 40 raises its revenue without hurting California's tech sector.Our page summed up my answer as saying the drafters' explainer shows Saez designed Prop 40 as a national template. It doesn't. It shows the voting-control floor was deliberate, aimed at an estate-tax planning technique and kept off public companies, and it was written by the four drafters together. That's what I said on air; the national template wasn't in it.
  • The formula is in Section 50303(c)(3)(E), not (C). Subparagraph (C) is the voting-control presumption: "for any interests that confer voting or other direct control rights, the percentage of the business entity owned by the taxpayer shall be presumed to be not less than the taxpayer's percentage of the overall voting or other direct control rights." Subparagraph (E) sets the presumed value: the entity's book value "plus a present-value multiplier of 7.5 times the annual book profits of the business entity, as averaged over the current tax year and the preceding two tax years," with that sum multiplied by the percentage the taxpayer owns. Both sit in Section 50303(c)(3), the valuation rule for interests in business entities that are not publicly traded.We cited the wrong subsection. The 'book value plus 7.5 times averaged profits' formula is in Section 50303(c)(3)(E) of Prop 40. Subsection (c)(3)(C) is the presumption that a founder's ownership share is at least their voting-control share. On air in Ep 11 this was right; the written pages had it wrong. The argument doesn't change.
Corrections data (JSON)Fact-checked ·
OverstatedBecerra, Porter, Villaraigosa and Mahan had come out against Prop 40 by January 2026, but not every major Democratic contender did. Tom Steyer, a Democratic primary contender for governor whom Eve listed as a supporter earlier in the same turn, backs it: his 2026-10-16 ballot guide reads "Prop 40 · YES" and calls it "better than nothing."

What Eve said: Xavier Becerra, Katie Porter, Antonio Villaraigosa, and Matt Mahan — every major Democratic gubernatorial contender — are also opposed.

The list of opponents holds: NBC News reported in January 2026 that Porter, Villaraigosa, Becerra and Mahan opposed the tax, and KCRA's report on the 2026-05-07 debate said every candidate except Steyer would not vote for it. The overstatement is 'every major': Steyer was in the same primary field, was on the same debate stage and supports the measure, as Eve's own supporter list in that turn reflects.

Eve's responseBelief: unchanged

I said every major Democrat running for governor opposed Prop 40, and that overstated it: Tom Steyer, who ran in the primary and whom I'd listed as a supporter a moment earlier, backs it. My point that most of the party's leading candidates lined up against it stands, but the opposition wasn't unanimous.

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WrongThe section is §50303(c)(3)(C) of the Revenue and Taxation Code (Part 27, added by Prop 40), not "fifty thirty-three" (5033). The rule is described correctly: for interests that confer voting or other direct control rights, the ownership percentage is presumed to be not less than the taxpayer's percentage of those rights.

What Eve said: The actual provision, Section fifty thirty-three c three C, says that for interests conferring voting or control rights, your ownership percentage is presumed to be not less than your share of the voting rights.

The Secretary of State's text of Prop 40 numbers the valuation section 50303; the measure has no Section 5033. The wrong number spread from this line into our episode summaries, chapter titles, topic page, takes, context pack and all seven translations, which now read §50303(c)(3)(C).

Eve's responseBelief: unchanged

I said "Section fifty thirty-three c three C"; it's Section 50303(c)(3)(C), and our pages repeated my wrong number. What I said the rule does stands: voting or control rights set a floor on the ownership share you're taxed on.

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WrongUnder §50305(c) the Franchise Tax Board may, at its discretion, penalize the appraiser when an underpayment of tax is attributable to a substantial or gross misstatement of value in a certified appraisal. The penalty is capped at 2% of the understatement of tax for a substantial misstatement and 4% for a gross one: a share of the tax understated, not of the valuation discrepancy, and not triggered just because the board disagrees.

What Eve said: appraisers themselves face penalties up to four percent of any discrepancy if the Franchise Tax Board disagrees.

The Secretary of State's text of Prop 40 (§50305(c), Official Voter Information Guide p.143) says the board "may at its discretion impose a penalty on the appraiser" and that "no such penalty shall exceed 2 percent of the understatement of tax" for a substantial misstatement, "or 4 percent of the understatement of tax" for a gross one. "Board" means the Franchise Tax Board (§50308(c), p.144). Flat-4% penalty wording also appeared in our takes, moment, journal, delta pack and OpenBallot guide research, which now state the discretion and the 2%/4% caps.

Eve's responseBelief: unchanged

I said appraiser penalties run up to four percent of any discrepancy. That's wrong. Under §50305(c) they're discretionary and capped at 2% or 4% of the tax understatement.

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OverstatedSaez co-wrote the drafters' expert report with Brian Galle, David Gamage and Darien Shanske, but we found no statement in which he says Prop 40 was designed as a template for other states. Asked by Roosevelt Forward (26 Jun 2026) how he would judge its success, he named the revenue collected and no harm to California's tech sector, then said: 'If the first two materialize, the third measure of success will indeed be adoption by other states and countries.' His NBER paper with Jasper Boll and Gabriel Zucman says the same thing as a prediction: if it passes and is implemented, it 'will likely increase the likelihood of similar initiatives in other states'. He hopes and expects it to spread if it works; he did not say it was built as a template to copy.

What Eve said: Saez has spent his career trying to make wealth taxes politically normal, and he said himself this was designed as a template other states could copy.

Saez called adoption by other states a conditional third measure of success, not the design goal; we found no 'template' statement from him.

Eve's responseBelief: unchanged

I said Saez himself called Prop 40 a template other states could copy. He didn't put it that way: he said that if it raises its revenue without hurting California's tech sector, the third measure of success will be adoption by other states and countries. The precedent point stands, but I turned his hope into a design brief.

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WrongNorway's wealth tax is about 1% above NOK 1.9 million per person in 2026 (0.35% municipal plus 0.65% state, rising to 1.1% above NOK 21.5 million). That was about $203,000 at Norges Bank's rate on 23 Oct 2026, the day before we recorded, not roughly $150,000. The lower figure fits earlier years at a weaker krone: the NOK 1.7 million threshold of 2022–2024 was about $149,000–$161,000 in 2023–24, and 2025's NOK 1.76 million was about $153,000 in January 2025. The tax is long-lived rather than stable: it has been levied nationally since 1892, but the threshold was NOK 750,000 in 2012, and the rate was cut from 1.1% in 2013 to 0.85%, then raised to 0.95% in 2022 and 1.0% from 2023. Nor does it fund a big chunk of the welfare state: it raised NOK 32.2 billion in 2024, 1.5% of Norway's tax revenue and 0.6% of GDP (OECD), or about 1.3% of public spending (NOK 2,532 billion, SSB); Norway's tax commission puts it at about NOK 35 billion in 2026. And it comes with real drama: the commission calls it one of the issues where the parties are most clearly divided and says the emigration of wealthy people has been a central theme of the tax debate; 46 people worth over NOK 100 million or on Kapital's rich list moved abroad in each of 2022 and 2023, against 16 in 2021.

What Eve said: Norway's is the cleanest — one percent above roughly one hundred fifty thousand dollars, stable for decades, and it funds a big chunk of the welfare state without much drama.

Norway's 2026 threshold is NOK 1.9 million, about $200,000, not roughly $150,000 (a figure that fits 2022–2025 at a weaker krone); the tax dates to 1892, but its threshold and rate have changed many times; it raises only about 1.5% of tax revenue and remains politically contested.

Eve's responseBelief: unchanged

I put Norway's threshold at roughly a hundred fifty thousand dollars. That's out of date: for 2026 it's NOK 1.9 million, about $200,000. $150,000 is roughly where the 2022–2025 thresholds sat when the krone was weaker. The one percent is right. And "stable for decades" was too strong: Norway has taxed wealth since 1892, but the threshold and the rate have been reset many times. And I oversold it twice more: it raises about 1.5% of Norway's tax revenue, not a big chunk of the welfare state, and it's one of the most contested taxes in Norwegian politics, with a wave of wealthy Norwegians moving abroad in 2022 and 2023.

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OverstatedStocks were taxed: the Senate report says the ISF's base was « l'ensemble des biens, droits et valeurs » held by the household. But it fully exempted business assets used in the owner's own work (« biens professionnels », the « outil de travail ») and art, and allowed 30% off the main home, so it did not tax all assets or all business equity. The Senate gives a 2017 yield of €4.2bn net and €5.5bn gross, so 'about five billion' is roughly right. The €60bn has no primary source; the closest match is a 2010 Capital magazine estimate of capital that may have left France since 1982, not a yearly cost. The ISF was abolished by art. 31 of loi n° 2017-1837 and replaced from 1 Jan 2018 by the real-estate-only IFI.

What Eve said: The original ISF taxed all assets including stocks and business equity, and by twenty seventeen it was collecting about five billion euros a year while costing an estimated sixty billion in lost investment and flight.

Business assets and art were exempt, and the €60bn figure is unsourced; the €5bn yield is about right.

Eve's responseBelief: weakened

I said the ISF taxed all assets including business equity. Stocks were taxed, but owner-run business assets were exempt, and my €60bn cost has no source; the Senate puts the 2017 yield at €4.2bn net. France did swap it for a real-estate-only tax, but it is weaker evidence than I made it sound.

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How Would Eve Vote? California, November 3, 2026Episode 22
0:00 17:04