Shocking Taxes Vote: California Weighs Billionaire Levy

Image Source: The Washington Post

Taxes are at the center of a major California ballot fight as voters decide whether the state should impose a one-time levy on residents with a net worth of at least $1 billion. Proposition 40 has divided traditional Democratic allies, attracted unprecedented campaign spending and renewed debate over how governments should tax extreme wealth.

The measure, being decided on November 3, 2026, would apply a 5% tax to the net worth of qualifying California billionaires. Real estate and certain retirement assets would be excluded under the proposal. Supporters estimate that the initiative could raise $100 billion over five years, while independent analysts have suggested the final figure could be significantly lower.

California Taxes Billionaires in High-Stakes Prop. 40 Vote

Proponents say the new tax would provide urgently needed funding for health care programs at a time when California is dealing with federal reductions implemented in 2025 under H.R. 1, also known as the “One Big Beautiful Bill Act.” They argue that the money could help protect hospitals, emergency rooms, clinics and Medi-Cal services.

Under the proposal, 90% of the revenue would go toward health care. The remaining 10% would support education, food assistance and administrative costs related to collecting the tax.

• A one-time 5% tax would apply to qualifying billionaires.
• Supporters project as much as $100 billion over five years.
• Ninety percent of the proposed revenue would fund health care.
• Education, food assistance and administration would receive the remaining 10%.

A Powerful Argument Over Wealth and Public Services

Supporters say the proposal addresses a major gap in the current tax system. Billionaires can see their wealth rise through stock market gains and increased business valuations without paying income tax on those gains until assets are sold. Advocates contend that Californians who have benefited most from the state’s economic growth should contribute more to essential public services.

The California Democratic Party and labor unions, including SEIU Healthcare Workers West, support Proposition 40. The union is the measure’s principal sponsor. Supporters also point to research from economists including Nobel laureates Daron Acemoglu of the Massachusetts Institute of Technology and Joseph Stiglitz of Columbia University.

An open letter from economists supporting the initiative said billionaires paid California income taxes equal to only 1.6% of their $1.4 trillion increase in wealth between 2019 and 2025. They argued that this rate was far below the effective tax burden faced by ordinary workers.

Opponents Warn of an Explosive Wealth Exodus

Opposition to Proposition 40 has also united prominent figures who typically favor higher taxes on wealthy individuals and corporations. Gov. Gavin Newsom and former Orange County Rep. Katie Porter oppose the measure, warning that wealthy residents could relocate and weaken California’s long-term tax base.

Newsom has said he prefers a federal billionaire tax rather than a California-only approach. He has also argued that the proposal is too narrowly focused on health care and does not provide enough flexibility for other state priorities.

Major health care and professional organizations, including the California Medical Association and California Teachers Association, have also opposed the initiative. Critics say the measure does not guarantee how the money would be distributed among providers and services.

A coalition of wealthy opponents includes Google co-founders Sergey Brin and Larry Page, venture capitalist John Doerr, PayPal and Palantir co-founder Peter Thiel, venture capitalist Vinod Khosla and Stripe CEO Patrick Collison.

The opposition group Building a Better California had raised more than $250 million as of October 28, according to campaign reporting. Some of that money is also being used to support Propositions 41 and 42, competing measures that would limit special taxes and could block Proposition 40 if either receives more votes.

Revenue Estimates Could Decide the Outcome

A Stanford University study has raised questions about the measure’s financial promise. Researchers estimated that billionaires who have already left California, including Brin, Page and Thiel, removed roughly $540 billion, or 30%, of the state’s billionaire wealth from potential taxation.

The study concluded that Proposition 40 might generate closer to $30 billion rather than the $100 billion projected by supporters. That difference could have a major impact on health care planning and the state’s overall budget outlook.

Not every billionaire opposes the proposal. Nvidia CEO Jensen Huang, whose estimated net worth is about $200 billion, has said he supports paying more in taxes. “I don’t mind paying taxes; the more you make, the more taxes you pay, so I’m okay with that,” Huang told CBS News, while adding that he does not want tax dollars wasted.

The result of the vote could influence future debates across the country about wealth taxes, health care funding and economic inequality. Supporters see Proposition 40 as a historic test of whether extreme wealth can provide a new source of public revenue. Opponents view it as a risky experiment that could drive investment and high-income residents out of California.

Frequently Asked Questions About Proposition 40

What is Proposition 40?

Proposition 40 is a California ballot measure that would impose a one-time 5% tax on residents with a net worth of at least $1 billion, with some assets excluded.

How would the proposed tax revenue be used?

Supporters say 90% would fund health care programs, while the remaining 10% would support education, food assistance and administrative costs.

How much money could Proposition 40 raise?

Proponents estimate $100 billion over five years. A Stanford University study suggested the total could be closer to $30 billion because some billionaires have already left the state.

Who opposes the billionaire tax?

Opponents include Gov. Gavin Newsom, Katie Porter, several major professional organizations and a coalition of technology and investment billionaires.

Who supports Proposition 40?

The measure is supported by the California Democratic Party, labor unions including SEIU Healthcare Workers West, several economists and Nvidia CEO Jensen Huang.