Outspent 10-to-1: Silicon Valley Millionaire Scott Ellis Reacts to California's Rejected Billionaire Tax

Opponents of California's billionaire wealth tax spent over $300 million to defeat Proposition 40 — roughly ten times the $30 million its supporters could muster — and Scott Ellis, a 56-year-old Silicon Valley millionaire who campaigned for the measure, says that math decided the outcome. California voters rejected the proposed 5% wealth tax on billionaires on November 9.

"I'm disappointed, but I'm not surprised," Ellis told Business Insider in an as-told-to essay updated November 12. "The reality is that if people spend over $300 million opposing something and people spend about $30 million in favor, you get outspent by 10:1. That does matter."

Ellis is a member of Patriotic Millionaires, an organization of wealthy Americans who advocate for higher taxes on the rich, a livable wage, and a broader distribution of political power. Getting the measure on the ballot at all was, in his words, a big task — and he counts that as a win of sorts. It started what he calls "the right conversation": how much wealth do people have, is there such a thing as too much, and what should society do about it.

What does the defeat change for Californians?

Ellis's answer is blunt: the pressure that pushed the tax onto the ballot hasn't gone anywhere. Massive federal funding cuts are working through state and local budgets, and the proposition was driven by healthcare costs. "Millions of people are going to lose their healthcare; there will be more suffering," he said.

He also points a finger at the scale of the opposition. Google cofounder Sergey Brin alone spent over $100 million in the single state election, according to Ellis. "When I think about my concern about excessive wealth and how it distorts democracy and undermines our society, you couldn't ask for a clearer example than Sergey Brin spending over $100 million in one state election," he said.

The $30 million threshold

The rejected tax wouldn't have touched Ellis or his family — it targeted billionaires only. But his argument goes further than the ballot measure ever did. His benchmark: $30 million in household wealth. Run the numbers on reasonable investment returns and inflation, he says, and $30 million buys a really nice first house, a second house, fully funded college for the kids, covered end-of-life expenses, and "a very, very luxurious ongoing existence."

"If you have $30 million in wealth, congratulations, you won capitalism," Ellis said. Beyond that point, he argues, life can't materially improve. His preferred policy is far more aggressive than Prop. 40: a 50% annual tax on all household wealth above $30 million.

For context, median household wealth in the U.S. sits under $190,000. Ellis contrasts that with the people around him in Silicon Valley — wealthy, talented founders whose next goal is generating more money, mainly for people who already have more than they could ever spend. Citing Census data, he notes 10% of American society lives in poverty. "It really feels unfair and wrong, and we can do better," he said.

A career arc from McKinsey to stay-at-home parent

Ellis studied poverty, housing, and sociology at Harvard, spent three years at McKinsey, then nearly eight years at Hewlett-Packard before Stanford business school brought him west. In 2007, with his wife a VP at Yahoo and two small kids at home, he looked at his boss's job and the CEO's job and decided he didn't want them. He stepped back to become the stay-at-home parent while his wife built a consumer-internet career spanning Yahoo, Google, and Pinterest.

Since 2012 he has started and run several education nonprofits and advised nearly 200 individuals and organizations on strategy, finance, operations, and culture.

The exit threat, dismissed

What about the perennial warning that billionaires will flee California? Ellis calls it a distraction — a conversation swap that replaces talk of millions losing healthcare with worry about the roughly 200 very rich people who might relocate. People and companies move all the time, he says, and Silicon Valley doomsaying has aged badly: "20 years later, look around. There are still some companies here; it's just fine."

He notes Nvidia's CEO recently said the company is staying in California because that's where the talent is, and adds his own pitch: 65-degree sunny weather, the Golden Gate Bridge, Tahoe, and the Redwoods. Ellis himself isn't going anywhere — Broncos coasters notwithstanding, he's from Silicon Valley now.

He still believes real change has to come from Washington. "I'm absolutely delighted that we're moving in this direction, but I believe changes to wealth taxes need to happen at the federal level," he said. In the meantime, he's glad Prop. 40 made the ballot and hopes additional efforts follow — because in his view, the conditions that created the fight are only getting worse.