Californians vote on nation’s first wealth tax on billionaires

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California voters are deciding whether the state will levy a first-of-its-kind tax on billionaires.

If it passes, Proposition 40 would assess a one-time 5% tax on the net worth of the state’s roughly 200 billionaires, targeting their stocks, bonds, business holdings and other valuable personal property.

Service Employees International Union-United Healthcare Workers West, the union pushing the measure, says it would generate an estimated $100 billion for healthcare and education to be spent over the next five years. The nonpartisan Legislative Analyst’s Office estimates the tax would raise “tens of billions of dollars” over several years, well short of the union’s projection, and says billionaires leaving the state could cut income tax revenue by less than $1 billion a year.

The results could also be complicated by two competing ballot measures: Propositions 41 and 42. Proponents of those measures designed them to conflict with Prop. 40, which means if either countermeasure receives more votes than Prop. 40, it nullifies the billionaire tax.

The union and other supporters argue that billionaires should pay their fair share to support social services programs the Trump administration cut last year.

From the outset, Prop. 40 revealed divisions in the Democratic Party and galvanized some of Silicon Valley’s wealthiest executives to spend hundreds of millions to defeat it.

Gov. Gavin Newsom became one of its earliest opponents, attempting through backroom negotiations to keep Prop. 40 off the ballot altogether. He endorsed Prop. 42, the billionaire-backed countermeasure designed to ban all wealth taxes in California and kill Prop. 40. Newsom, along with a cadre of Democratic allies such as Planned Parenthood of California and the California Teachers Association, argued a one-time tax would not solve the state’s fiscal woes and would drive wealthy residents out of state.

Despite party and labor divisions, the California Democratic Party and California Federation of Labor Unions supported the initiative and opposed its counter measures, arguing the state needs more revenue to shield workers and everyday Californians from the effects of dramatic federal healthcare cuts expected to kick 2 million residents off health insurance.

Billionaire opponents spend heavily

Billionaire opponents and business interests poured $316.7 million into the campaign to stop Prop. 40 — including support for Props. 41 and 42 — telling voters nearly the same message: Wealthy residents who contribute jobs to the economy and income tax to state coffers have already left, and more will follow if the initiative passes. They also made a largely misleading claim that lawmakers could lower the threshold of the wealth tax to include everyday Californians.

Google co-founder Sergey Brin led the opposition, publicly moving out of state and donating $102 million to Building a Better California, a political committee he founded to oppose the tax. The group has served as a passthrough for other billionaire donors to oppose Prop. 40.

Billionaire tax opponents also placed Props. 41 and 42 on the ballot.

Prop. 41 prohibits the state from collecting taxes that circumvent the state spending limit set in 1979, which Prop. 40 is designed to do. It also requires the state to audit future tax proposals before they reach voters and identify potential spending cuts in the programs they’d fund.

Prop. 42 prohibits the state from taxing financial assets, private businesses, pensions and other forms of wealth. It also prohibits retroactive taxes. These provisions directly conflict with the billionaire tax.

The state constitution dictates that when there are multiple competing ballot measures on the same ballot, the one that receives the most votes wins, nullifying its competitors.

Allegations against healthcare union’s leader

Prop. 40 is the brainchild of Dave Regan, president of Service Employees International Union-United Healthcare Workers West. He has been mired in scandal in recent months. Some members of SEIU California, the political umbrella organization representing the healthcare workers union, have accused him of threatening and intimidating women over the years and of attempting to “extort” support for the measure, according to an internal investigation commissioned by SEIU California and SEIU, the union’s national parent organization.

Separately, the California Primary Care Association, which represents clinics and opposes Prop. 44, another ballot measure run by Regan’s union, alleged in a recent lawsuit that the health workers union violated anti-racketeering laws in part by asking clinics to support the billionaire tax in exchange for killing the clinic initiative.

The union and Regan have called these allegations “categorically false” and characterized them as a “smear campaign” designed to derail the billionaire tax.

If Prop. 40 survives, billionaires who lived in California on Jan. 1, 2026 would be assessed the tax based on their net worth as of Dec. 31, 2026. Payments would be due in one lump sum or in installments over five years.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a price they can afford. Visit www.chcf.org to learn more.