Despite former FTX CEO Sam Bankman-Fried’s indictment in the Southern District of New York on eight counts of fraud, money laundering, and campaign finance violations, the November 2024 ballot in California will still carry a tax hike measure funded by the accused former billionaire. California’s Secretary of State continues to list the ballot measure as among those qualified to go before General Election voters next year.

The initiative would increase income taxes by 0.75% on personal income over $5 million. Half the revenue raised by the measure would fund a new California Institute for Pandemic Prevention to award grants for research and development of technologies to detect and prevent future pandemics. The remaining half would be split between public health programs for pandemic preparedness and local education agencies, for improvements to school facilities to limit disease transmission.

Between December 2021 and March 2022, SBF-controlled Alameda Research contributed over $12 million dollars to Guarding Against Pandemics, an advocacy group run by Gabriel Bankman-Fried, SBF’s brother. This organization then donated the funds to Californians Against Pandemics, which gathered the signatures necessary to put the pandemic prevention tax measure on the state ballot.

Since preventing pandemics seems to be a reasonable goal, voters ignorant of the measure’s origins may vote for it next year. So it is worth considering the tax’s merits as well. Like the recently-defeated Proposition 30 (2022), the Pandemic Preparedness Tax would further cement California’s position as the state with the highest marginal tax rate on top earners.

The tax hike could convince some affluent Californians who are now on the fence to finally leave the state, reducing the consumption of high-end goods and services and potentially destroying jobs in the process.

Further, if affluent Californians leave, the state’s general fund will lose existing income tax revenue, which ranges up to 13.3% of income. This will force an automatic reduction to K‑12 school funding and discretionary cuts to other programs. This is why the California Teachers Association came out against the measure last spring, when it appeared destined for the November 2022 ballot.

The pandemic prevention revenue may seem worthy, but those funds may well be redundant, or even deleterious. For example, the American Rescue Plan Act (ARPA) allocated over $15 billion to California school districts, which could use the funds to buy MERV-13 filters or make other improvements to ventilation systems. ARPA also provided extra funding for public heath agencies, while the Omnibus Budget bill signed by President Biden in December increased funding to the Centers for Disease Control, the National Institutes of Health, and a the Hospital Preparedness Program—all of which can help California and the rest of the country avoid, minimize, or weather a future pandemic.

Finally, government preparation for pandemics is not an unalloyed good. A previous exercise in planning for pandemics during the George W. Bush administration introduced the concept of “social distancing” and the policy of school shutdowns. The CDC discounted warnings from academic researchers that closing schools and other points of assembly for extended periods “would almost certainly have serious adverse social and economic effects.”

Future California pandemic planning might be influenced by dystopian Chinese policies, such as forced removal to mass quarantine facilities or the use of color-coded smartphone apps to determine who can and cannot move about in public. As we saw last summer, Chinese authorities used the app to thwart public protests.

Siphoning tax revenues to fund innovative forms of social control and duplicate federal spending on schools and public health is not as attractive a use of tax money as the name “pandemic preparedness” suggests. And California voters should think carefully before ratifying the ideas of an accused fraudster.