California Billionaire Tax Trails in Early Results
A proposal to impose a wealth tax on California’s billionaires to fund healthcare was trailing Tuesday night, though it remains too early to call the result for Proposition 40.
Two competing measures placed on the ballot by billionaires opposed to the wealth tax were mixed. Proposition 41 was behind in a neck-and-neck race, while Proposition 42 was leading. Both measures contain language aimed at undermining Proposition 40, making it impossible for the state to enforce the wealth tax if they pass with more votes.
Proposition 40 asked voters whether to assess a 5% tax on the overall wealth of anyone who lived in California as of Jan. 1 of this year and had assets topping $1 billion, which would apply to about 200 people.
The money raised by the tax — some $100 billion over five years, according to supporters — would backfill healthcare cuts imposed by President Donald Trump and Republicans in Congress under last year’s so-called One Big Beautiful Bill.
It’s a type of tax that’s never been attempted in the U.S. and one that aimed to get at the vast wealth of the state’s billionaires by taxing their overall assets, not just their income or capital gains. That overall wealth grew by an estimated 15% per year from 2019 to 2025. The measure was placed on the ballot by SEIU-UHW West, a union representing more than 120,000 healthcare workers in California.
But after spending more than $20 million to qualify the measure, the union was vastly outspent by billionaires opposed to Proposition 40 and in support of Propositions 41 and 42. Google co-founder Sergey Brin alone donated more than $100 million, and the campaign raised more than $330 million overall.
The yes side, by comparison, was only able to raise a total of about $33 million.
Some surprising allies, including Democratic Gov. Gavin Newsom, the California Teachers Association and Planned Parenthood, buoyed the no side. They all argued that the measure would ultimately hurt California’s budget and economy by driving wealthy executives and businesses out of state.
A loss would raise questions about the future of tax reform in other states and nationally. Progressives had hoped Proposition 40 could serve as a model for federal legislation, something billionaires saw as a huge threat to their wealth.
The outcomes of Propositions 41 and 42 could also have broader effects on the state budget in years ahead, beyond the billionaire tax. Proposition 41 would require ongoing audits of state programs that are funded by “special” taxes — those earmarked for a specific purpose. It also would make any new special taxes subject to the state’s existing spending limit.
Proposition 42 would prohibit new taxes on financial assets — such as stocks — and other personal property, and would also prohibit most retroactive taxes.