California voters reject a tax-the-rich ballot measure in midterm elections

California voters rejected a measure that would have dramatically raised taxes on wealthy individuals in the state in order to raise money for climate-related projects. 

About 59% of voters opposed Proposition 30, while 41% supported it, according to The Associated Press, with roughly 41% of the votes counted early Wednesday morning. 

The measure would have hiked taxes by 1.75% on those earning $2 million per year, generating up to $5 billion in new revenue annually. The bulk of that money would go to programs that help people buy electric cars and install charging stations. A smaller portion would have gone toward wildfire prevention efforts. 

The proposed wealth tax drew opposition from billionaire donors and Gov. Gavin Newsom, a Democrat, in the run-up to the election. 

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That is because the ballot measure's biggest financial backer was the ride-sharing company Lyft, which donated at least $45 million ahead of a mandate that will require the majority of its drivers to use electric vehicles by 2030. 

Newsom belittled the tax as a "cynical scheme" by Lyft to meet the state's EV mandate — at the expense of the taxpayers. 

"Prop 30 is being advertised as a climate initiative," Newsom said in an advertisement against Prop 30. "But in reality, it was devised by a single corporation to funnel state income taxes to benefit their company. Put simply, Prop 30 is a Trojan horse that puts corporate welfare above the fiscal welfare of our entire state."

Proponents of the measure said it could help to facilitate the clean vehicle transfer that Newsom has so vehemently pushed for as California — the largest new car market in the country — tries to shift away from gas-guzzling vehicles that are one of the main culprits of climate change. 

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If the tax passed, wealthy Californians would see the top marginal rate on their wage income climb to 16.15%. California already has the highest income tax in the country, with a top rate of 13.3% for those earning more than $1 million. 

The proposal came as California grapples with an exodus of residents who are fleeing the state for more affordable destinations like Florida, Tennessee, Texas and Nevada that have a lower tax burden. 

California actually saw its population shrink by 0.8% in 2021, as more Americans migrated to red states with lower taxes, according to a separate Tax Foundation report.

Some of the most notable residents to flee include Tesla CEO and the world's current richest person Elon Musk, who left for Texas after complaining that California had become "the land of sort of overregulation, overlitigation, overtaxation." Oracle CEO Larry Ellison, Dropbox co-founder and CEO Drew Houston and Palantir co-founder Joe Lonsdale also left the state. 

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Companies including Oracle, Palantir and Hewlett-Packard Enterprise have also packed up and relocated their headquarters from the Golden State. 

"With 21 states cutting individual income tax rates since last year, such increases set California at even greater odds with its state competitors," said Jared Walczak, the Tax Foundation's vice president of state projects.