Proposition 40, also known as the California billionaire tax or California wealth tax, is a combined initiated constitutional amendment and state statute that appeared on the November 3, 2026, ballot in the state of California. The measure was rejected by voters.[1]
The measure would have imposed a one-time 5% tax on the accumulated wealth of the state's billionaires. Revenue from the tax would have primarily funded state healthcare programs, with a smaller portion going toward food assistance and public education. Proposition 40 was sponsored by the labor union SEIU United Healthcare Workers West.
On April 26, 2026, SEIU-UHW announced that they had collected 1.6million signatures in support of the tax, nearly double the 874,641 required to qualify for the November ballot.[6][7] On June 17, the California secretary of state announced that the wealth tax had qualified for the ballot with 980,438 valid signatures.[8][9]
A day later, SEIU-UHW sent a letter to California governor Gavin Newsom—an opponent of the initiative—offering to withdraw the 5% wealth tax proposal if Newsom supported a smaller 2% levy on billionaires that would be passed by the state legislature;[10][11][12] Newsom quickly rejected the amended proposal.[13] Negotiations stalled before the June 25 withdrawal deadline, and the initiative was certified for the November ballot.[14][15]
Impact
The initiative would have imposed the Billionaire Tax Act, a one-time 5% tax on the net worth of the California residents worth over $1billion.[16] 90% of revenue from the tax would have funded state-funded healthcare programs,[17] including Medi-Cal, with the rest funding for food assistance and public education.[16]
The eligibility cut-off outlined in Proposition 40 was January 1, 2026, meaning that if the initiative was passed by voters, billionaires who continued to hold residence in the state of California after that date would have been subject to the 5% tax.[16] Seven of the state's estimated 214 billionaires were reported to have left California before or around the deadline, including PayPal co-founder Peter Thiel, former Uber CEO Travis Kalanick, and Google co-founders Larry Page and Sergey Brin.[18][19][20]
Revenue
The California Legislative Analyst's Office found the wealth tax would create a temporary increase in revenue of up to tens of billions of dollars total, collected over several years.[21][22] The analysis also discussed a "possible ongoing decrease" of less than $1 billion annually from billionaires leaving California.[21][23]
SEIU-UHW, the labor union behind the initiative, estimated that the tax would generate $100billion,[24] though revenue from the billionaires who left the state prior to the deadline accounted for an estimated $29billion of that sum, according to Fortune.[25][26] Academic Kent Smetters cast doubt on SEIU-UHW's estimate, telling the Los Angeles Times that the union was "not accounting for the different ways that people can move or reclassify wealth".[27]UC Berkeley economics professor Enrico Moretti warned that the tax "has the potential to completely destroy California's economy", and described SEIU-UHW's revenue estimate as "way overly optimistic."[3]
The conservative-leaning Hoover Institution estimated that "permanent loss of income taxes from the departing residents indicates a high likelihood that net effect of the Billionaire Tax Act will be negative" by almost $25billion.[28] This conclusion was criticized by one of the bill's authors, David Gamage, who contended that the group's analysis "suggests that the billionaire tax might raise more revenue than our projections even say".[29]
In a guest essay for The New York Times, Gabriel Zucman and initiative co-author Saez responded to concerns about billionaires fleeing the state, claiming that because billionaires are able to avoid income tax on most earnings, "even if all of them left the state, it would take 25 years for the loss of their tax payments... to surpass the amount the state would raise".[30] In a working paper, Saez and Zucman, alongside co-author Jasper Boll of the Paris School of Economics, estimated that state income tax payments by California billionaires make up 2.4 percent of California's annual income tax revenue.[31]
Economist Teresa Ghilarducci of the Economic Policy Institute, a pro-union think tank, considered an exodus of billionaires due to the tax unlikely, pointing to a 2022 Massachusetts 4% surtax on income above $1million that exceeded projected revenue.[32]Nuveen, an asset management company, also concluded billionaire outmigration was unlikely and that the tax posed "minimal risk" to California's credit profile and municipal bonds.[33]
In October 2026, two Stanford University and Hoover Institution researchers—Benjamin Jaros and Joshua Rauh—released a working paper that simulated various possible outcomes if Proposition 40 was approved by voters.[34] The researchers estimated that the tax could cost California $39 billion in tax revenue, with 85 percent of the 100,000 simulated plausible scenarios showing in a net negative revenue impact over the long term.[35] Emmanuel Saez criticized the revenue estimates in the analysis and its assumption that billionaires would never return to California after the tax.[36]
Effective tax rate
The Tax Foundation, a center-right think tank, argued that it was possible for the effective wealth tax rate to far exceed 5% for some taxpayers due to provisions related to dual-class share structures,[37] but acknowledged that this would be unlikely in cases where valuations are clearly incorrect.[38][39] The initiative's drafters published a report arguing that this concern was based on a misreading of the text.[38][40]
Real estate
Forbes cited Proposition 40 as the reason for a real estate boom on Nevada's side of Lake Tahoe, noting that a number of lakefront homes were purchased by California billionaires after the proposal was announced.[41] Bill Dietz, a Lake Tahoe realtor, told the magazine that a "clear acceleration of ultra-high-net-worth buyers moving from California to Nevada" took place, driven by "tax strategy".[41]
The state branch of the Democratic Socialists of America endorsed the billionaire tax, stating that "without this funding, thousands of jobs will be lost, millions of Californians could lose coverage altogether, and care facilities across the state could be forced to close".[45][46]
Current Affairs editor Alex Scopic argued in favor of the tax, considering it an important method of countering the "buy, borrow, die" tax avoidance strategy used by some billionaires.[39] Emmanuel Saez, a co-author of the initiative, said that the tax would "preserve [healthcare and education] programs that are crucial for California's economy".[3]
In August 2026, the California Democratic Party endorsed Proposition 40.[50][51] After a failed initial endorsement vote and an unsuccessful alternative motion to adopt a neutral position on the measure, a second endorsement vote yielded 61.7 percent in favor, narrowly exceeding the 60 percent threshold for endorsement.[52]
In September 2026, a group of six progressive Nobel laureates of economics published a letter in support of the tax, arguing that it would help address growing inequality in California and loopholes that have allowed billionaires to avoid taxes on capital gains.[53][54][55] The economists wrote that if California passed Proposition 40, it would "kickstart a movement" to tax ultra-high-net-worth individuals elsewhere.[54]
SEIU-UHW extortion and abuse allegations
In February 2026, SEIU United Service Workers West (SEIU-USWW) president David Huerta and three other labor leaders filed a formal complaint against SEIU-UHW president Dave Regan, accusing him of extorting them by suggesting that he would "report unspecified governance concerns to the U.S. Department of Labor ... if [they] did not support the billionaire tax".[56][57] An investigation initiated by the SEIU's national branch substantiated these claims as well as allegations from SEIU California executive director Tia Orr that Regan had threatened her by telling her to "endorse this measure ... or I'm coming for you".[57][58]
A September 2026 report from SEIU California found that Regan had "engaged in a pattern of subjecting former and current SEIU California female directors to intimidating and threatening physical behavior" and substantiated former union leader Courtni Pugh's allegations that Regan physically assaulted her.[57] Regan denied this and claimed that because Pugh worked as a political consultant against the tax, she had a reason to lie.[57] A separate investigation found that Regan had intimidated and bullied SEIU California's government relations director, Jessica Bartholow, by standing "uncomfortably close" to her as "tensions flared over the billionaire tax" before "scream[ing] an expletive at her".[57]
On September 11, 2026, the California Nurses Association, who support Proposition 40, published a statement urging Regan to resign over "inappropriate, aggressive behavior and threats targeting other labor staff to support the Prop. 40 billionaire tax initiative."[59] Regan dismissed the allegations as political retaliation over his support for the billionaire tax; an independent investigation found that his claims were unsubstantiated.[56]
Ayn Rand Institute associate fellow Robertas Bakula argued in the Los Angeles Daily News that Proposition 40's eligibility deadline of January 1, 2026, would be illegal due to a constitutional ban on retroactive laws.[63] In a February 2026 effort to curb the effects of the eligibility deadline in the event that Proposition 40 passed, U.S. representative Kevin Kiley introduced a bill in Congress that would prohibit a state from levying a tax retroactively on people who no longer live in the state.[43]
In an April 2026 editorial, The Wall Street Journal criticized wording in the act that would have allowed the state legislature to make amendments to widen the scope of eligibility for the tax.[64] In May 2026, The Washington Post publicly opposed the "self-destructive" tax, stating that the initiative "has already cost the state more in lost future revenue from income taxes than it would raise".[65] In September 2026, the Los Angeles Times published its first editorial in 18 months, urging voters to oppose Proposition 40, claiming that it was "poorly drafted" and has "insufficient guardrails to ensure the funds are spent to actually address Californians' most pressing healthcare needs".[66] In a later interview, former Los Angeles Times editor Mariel Garza noted that the newspaper's owner, Patrick Soon-Shiong, is a billionaire.[67]
Google co-founder Sergey Brin spent more than $100 million opposing the tax
Building a Better California, an organization co-founded by Sergey Brin and Eric Schmidt that opposed the billionaire tax,[68] introduced two questions to the November 2026 ballot, both of which were designed to curb the effects of the billionaire tax if it passed.[69][17] One, known as Proposition 41, would have barred new taxes from circumventing rules on education spending requirements for tax revenue,[70][69] while the other, Proposition 42, would invalidate the billionaire tax by amending the state constitution to forbid retroactive taxation.[69][71] Another measure that would have required more audits of special taxes and imposed more rules on how revenue could be spent did not qualify for the ballot.[72][43] Proposition 41 was narrowly rejected by voters, while Proposition 42 is expected to pass.[73][74]
In June 2026, a number of progressive organizations[80][81] announced their opposition to the billionaire tax.[82][83][84] In a joint statement, Planned Parenthood and the California Medical Association criticized the wealth tax's ambiguity and described it as a "flawed response" to health care cuts,[82] while the California Teachers Association stated that the billionaire tax "will not provide the sustainable and long-lasting funding that our schools and communities deserve".[84] That same month, various California housing advocacy groups—including California YIMBY—opposed the tax, fearing that it would discourage investment and worsen the state's housing shortage.[85]
Nvidia CEO Jensen Huang, who would have paid roughly $8billion if the measure passed, stated he was "perfectly fine with it" and had "not thought about it once" when asked if he was concerned about the tax. He added that he and others "chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it".[88][89] The League of Women Voters of California adopted a neutral position on Proposition 40, stating that while the measure addressed "urgent needs", its one-time structure "conflict[ed] with sound public finance principles and risks long-term revenue loss".[90]
At a press conference on election night before polls had closed, Dave Regan inferred that he would reintroduce a version of Proposition 40 in 2028,[348][349] though CalMatters noted that Proposition 42, which is expected to pass, would "prevent [the introduction of] a differently written asset tax."[350] In a since-deleted tweet from November 4, SEIU-UHW stated that Proposition 40 "appears unlikely to pass".[348] On November 6, Decision Desk HQ projected that the measure would fail.[351]NBC News, CBS News, and the Associated Press called the race three days later, on November 9.[1][352][353]
Notes
↑Kiley was elected as a Republican before registering as an independent in 2026.[178]
↑Romero held office as a Democrat but switched her party affiliation to Republican in 2024.[191]
↑Poll sponsored by Kensington Avenue Strategies, a Republican strategy firm.[344]
↑Poll sponsored by Stop the Squeeze, a political action committee that opposed the initiative.[322]
Poll phrasing
↑Respondents were read the initiative's ballot title and summary. Those who had not yet voted were then asked: "If the election were held today, how would you vote on Proposition 40?", while those who had voted were asked: "How did you vote on Proposition 40?"[323]
↑"A YES vote on this measure means: The state would collect a one-time tax from billionaires equal to 5 percent of their wealth. A NO vote on this measure means: The state would not collect a one-time tax from billionaires equal to 5 percent of their wealth. If the election were held today and you were filling out your ballot right now, how would you vote on Proposition 40?"[324]
↑"Proposition 40 is called "Imposes One-Time Tax on Certain Taxpayers. Initiative Constitutional Amendment and Statute." It imposes 5% tax on certain taxpayers with assets over $1 billion; revenue primarily for health care. Exempts revenues from constitutional requirements for school funding and spending limit. Fiscal impact: temporary revenue increase of tens of billions of dollars spread over several years from wealth tax on billionaires. Possible ongoing decrease of less than $1 billion per year in income tax revenue from billionaires. Supporters: US Senator Bernie Sanders; SEIU United Healthcare Workers West. Opponents: California Primary Care Association; California School Boards Association; California Taxpayers Association. If the election were held today, would you vote yes or no?"[325]
↑Respondents were read the initiative's ballot title and summary. Those who had not yet voted were then asked: "If the election were held today, how would you vote on this initiative?", while those who had voted were asked: "How did you vote on this initiative?"[326]
↑"This November, Proposition 40 will appear on the ballot in California. If passed, the state would collect a one-time tax from billionaires equal to 5 percent of their wealth. If the election were held today, would you support or oppose Proposition 40?"[327]
↑Respondents were read the initiative's ballot title and summary. They were then given the Legislative Analyst's Office's estimate that Proposition 40 would raise tens of billions of dollars but could cost up to $1 billion a year in income tax revenue if wealthy residents leave California.[328]
↑Respondents were read the initiative's ballot title and summary.[329]
↑Respondents were read the initiative's ballot title and summary.[330]
↑"A YES vote on this measure means: The state would collect a one-time tax from billionaires equal to 5 percent of their wealth. A NO vote on this measure means: The state would not collect a one-time tax from billionaires equal to 5 percent of their wealth. If the election were held today and you were filling out your ballot right now, how would you vote on Proposition 40?"[331]
12"If the election were held today, how would you vote on this initiative?"[134]
↑"If the election were held today, would you vote yes or no?"[333]
↑Respondents were read the initiative's ballot title and summary.[334]
↑Respondents were read the initiative's ballot title and summary.[335]
↑Respondents were read the initiative's ballot title and summary.[336]
↑Respondents were read the initiative's ballot title and summary.[337]
↑Respondents were read the initiative's ballot title and summary.[339]
↑"A proposed citizens' initiative for the November 2026 state ballot is titled "Imposes One-Time Tax on Certain Individuals and Trusts. Initiative Constitutional Amendment." It imposes a one-time tax of up to 5% on taxpayers and trusts with covered assets valued over $1 billion; covered assets include businesses, securities, art, collectibles, and intellectual property, but exclude real property and some pensions and retirement accounts. It allocates 90% of these tax revenues for health care, 10% for food assistance or education-related programs; and prohibits using revenues to replace existing funding for these purposes. It exempts such tax revenues from constitutional requirements for school funding, budget reserves, and state spending limit. If the election were held today, would you vote yes or no?"[134]
↑"The Billionaire Tax initiative calls for imposing a one-time 5% state tax on the total wealth of any California resident whose net worth is greater than 1 billion dollars. Supporters say it will provide much needed tax revenues and help offset the cutbacks being made by the Trump administration to existing state health care and food assistance programs. Opponents say its passage would undercut state tax revenues in the long run and stifle innovation as many of California's highest paying taxpayers and most successful individuals may choose to leave the state to avoid the tax. If you were voting today on the Billionaire Tax Initiative, would you vote Yes or No?"[134]
↑Respondents were read the initiative's ballot title and summary.[344]
↑"Do you support or oppose the Billionaire Tax Act, which would impose a one-time five percent tax on the accumulated net worth of individuals in California with a net worth of one billion dollars or more?"[134]
↑Fields, Ashleigh (April 27, 2026). "California billionaire tax has enough signatures for ballot, backers say". The Hill. Retrieved April 28, 2026. Supporters say 1.6 million people have submitted signatures favoring the Billionaire Tax Act for approval, according to the Los Angeles Times. State law requires at least 874,641 registered voters to provide signatures to county elections officials by June 24, per the outlet.
↑Mac, Ryan; Schleifer, Theodore; Knight, Heather (January 9, 2026). "Google Co-Founders Sergey Brin and Larry Page Reduce Ties to California". The New York Times. Retrieved May 23, 2026. Mr. Brin and Mr. Page still have connections to California, including homes across the state. It's unclear how much time they will be spending in the state this year.
12"Proposition 40 - Analysis of Measure". California Legislative Analyst's Office. Retrieved September 8, 2026. Temporary state revenue increase from a new wealth tax on billionaires. These wealth tax revenues probably would add up to tens of billions of dollars spread over several years. Possible ongoing decrease of less than $1 billion per year in state income tax revenue collected from billionaires.
↑"California considers one-time tax on billionaires". Nuveen. February 9, 2026. Retrieved July 15, 2026. Our analysis suggests the billionaire tax – whether enacted or not – poses minimal risk to the state's credit quality and municipal bond portfolios. Historically, tax changes have rarely triggered significant population shifts among high-net-worth individuals.
↑"'Widow's Bay' cleans up, and makes history, at the Emmys". KCRW. Retrieved October 5, 2026. Considering the paper's owner, Dr. Patrick Soon-Shiong, happens to be a billionaire himself, the optics don't look good, according to former LA Times editorials editor Mariel Garza.
↑Rosenhall, Laurel (June 17, 2026). "Unlikely coalition begins campaign against billionaire tax in California". San Francisco Examiner. Retrieved June 20, 2026. They include progressive groups such as the California Teachers Association and Planned Parenthood, as well as housing organizations, a hospital association and unions representing construction workers and police officers.
↑Gardiner, Dustin; Holden, Lindsey (March 30, 2026). "SF tech donors take aim at 'overpaid CEO tax'". Politico. Retrieved April 3, 2026. The wealth tax, by contrast, has received just under $10 million from SEIU-UHW to date, but it picked up another major endorser in Sen. Chris Murphy (D-Conn.).
12Gilman, Io Yeh (January 8, 2026). "S.F. congressional candidates vying for Pelosi's seat stake out contrasts in first debate". Mission Local. Retrieved March 21, 2026. During the course of the two-hour debate, Wiener also didn't take a stance on a potential 5 percent tax on California billionaires that some unions are proposing, saying that he's waiting to see what tax measures make it to the ballot. Chan and Chakrabarti both said they supported the tax.
↑"Our endorsements on local ballot measures and state propositions on the Nov. 3 ballot". Monterey County Weekly. October 1, 2026. Retrieved October 5, 2026. We suggest you vote for it despite its flaws – because nothing to reform our tax system to make it more fair is coming from Washington or Sacramento, and because a tax system this lopsided will not fix itself.
123456789McCarthy, Will (August 17, 2026). "California Dems rally the troops against Prop 39". POLITICO. Retrieved September 6, 2026. A group of Assembly Democrats are coming out against the billionaire tax with a public letter of opposition, the latest sign of opposition from establishment Democrats to the measure. The nine lawmakers, Patrick Ahrens, Anamarie Ávila Farías, Lisa Calderon, Stephanie Nguyen, Jacqui Irwin, Blanca Pacheco, Michelle Rodriguez, Catherine Stefani, and John Harabedian, write in the letter, shared first with Playbook, that the measure is "well-intentioned" but will ultimately do more harm than good.
↑"2026 State and Local Ballot Measure Guide". Council for Citizens Against Government Waste. October 16, 2026. Retrieved October 17, 2026. Voters in California and Colorado will consider measures that would impose new taxes on income and wealth. CCAGW urges a "No" vote on all of them. In California, Proposition 40 would levy a one-time 5 percent tax on accumulated wealth exceeding $1 billion. Wealth taxes have a dismal track record, driving out high-contributing residents and businesses while increasing enforcement costs.
↑"Billionaire Tax Negotiations". GrowSF. Retrieved June 20, 2026. We hope this large-scale asset seizure is withdrawn. Everyone should pay their fair share, and sustainable tax policy requires that tax rates are stable, predictable, not punitive, and hard to game. Policies like a one-time asset seizure tell entrepreneurs: don't build your company here. Some billionaires have already left the state, and more are likely to follow, whether or not the seizure ultimately ends up legal or not. This will have a big negative impact on tax revenues, innovation, and the broader economy. California should focus on delivering the basics with a reasonable budget instead of chasing one-time wealth grabs that could push out the tax base we already depend on.
12"California farm groups line up against Proposition 40". Agri-Pulse. Retrieved October 28, 2026. The California Farm Bureau, Western Growers and 14 county farm bureaus spanning the state are campaigning forcefully against Proposition 40, the initiative on the Nov. 3 ballot that would impose a 5% one-time tax on an estimated 200 state residents whose net worth exceeds $1 billion [...] Joining the Butte County Farm Bureau in opposing Proposition 40 are the farm bureaus in Contra Costa, Fresno, Humboldt, Kern, Lake, Mendocino, Monterey, Napa, Placer, San Diego, San Joaquin, Shasta and Sonoma counties, according to a campaign news release.
↑"Vote No On 40". The American Independent Party. Retrieved October 5, 2026.
↑"Endorsements". CAGOP. April 29, 2026. Retrieved September 4, 2026.
↑"The Desert Review Editorial Board Proposition Voter Guide". The Desert Review. October 15, 2026. Retrieved October 20, 2026. Prop 40 – NO Sold as a "Billionaire" tax but described as a broader wealth/savings tax (on assets including savings, 401(k)s, stocks, home equity). Contains language allowing future expansion without another public vote. Could force you to sell assets to pay the tax.
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