California voters rejected Proposition 40, a proposed one-time tax on billionaires, in the midterm election.
How Proposition 40 Would Have Worked
California voters rejected Proposition 40, a proposed one-time tax on billionaires, in the midterm election. It took nearly a week of vote counting after the election to determine a projection on the measure. The campaign over the proposal was the most expensive in California state history.¹²³
The measure proposed a one-time 5% tax on individuals in California whose net worth exceeded $1bn as of 1 January 2026. The tax would have applied retroactively to people residing in the state on that date. Its threshold was based on an individual’s total wealth, rather than annual income.¹²³
The healthcare union SEIU-United Healthcare Workers West sponsored Proposition 40. The proceeds would have funded healthcare programs, along with some education and food assistance. One named program was Medi-Cal, California’s Medicaid program, which provides healthcare to qualifying low-income residents. Backers projected that the tax could have raised as much as $100 billion over five years.¹²³
The healthcare union SEIU-United Healthcare Workers West sponsored Proposition 40.
The Tax Sat At The Centre Of A Wider Wealth Debate
Proponents also presented the tax as a way to make up for federal healthcare funding cuts in California resulting from President Donald Trump’s sweeping tax and spending bill. California had a little over 200 billionaires, whose combined wealth was approximately $2 trillion. Experts believed the measure would have been the world’s first wealth tax targeting billionaires.¹²³
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Read More →California had some twenty-three million registered voters, the largest economy in the country and the fourth-largest economy globally. It also had one of the world’s highest concentrations of billionaires and one of the highest wealth gaps. Those figures formed the backdrop to a proposal focused on the wealth of a relatively small group of residents.¹²³
Nic Carter, a general partner at the crypto-focused venture capital firm Castle Island Ventures, argued that the tax would be a huge win for more fiscally conservative states such as Florida and Texas. He called the proposal a “sword of Damocles hanging” over founders and claimed that such a tax would “inhibit venture capital investment.”¹³
Opponents Funded Counter-Measures And Built A Costly Campaign
Gavin Newsom, California’s governor, steadfastly opposed Proposition 40. He expressed concern that the measure could prompt wealthy residents to leave the state and take their income-tax revenue with them. Opponents argued that the billionaire levy was “an everyone tax,” presenting it as a measure with consequences beyond the people whose wealth it targeted.¹²³
The opposition campaign also put two separate counter-measures on the ballot: Proposition 41 and Proposition 42. Proposition 41 directly targeted the billionaire tax. Proposition 42 was a broader proposal to limit certain new taxes and would have banned any taxation of billionaire wealth. Supporters of the tax called both measures “poison pills.”¹²³
Opponents Funded Counter-Measures And Built A Costly Campaign Gavin Newsom, California’s governor, steadfastly opposed Proposition 40.
The opposition campaign’s donors included executives from Google, Palantir, DoorDash, Stripe and Reddit. Sergey Brin, a Google co-founder, contributed at least $132m to fight the tax. The billionaires mounted a nearly $425m battle against Proposition 40, and in the first two weeks of October, spending surpassed $2.5m a day.¹³
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Read More →Bernie Sanders, the Vermont senator, and Ro Khanna, a California congressman, backed the proposal, while Planned Parenthood Affiliates of California opposed it. Emmanuel Saez, a French economics professor at UC Berkeley, helped create and promote the measure alongside Gabriel Zucman, another Berkeley economist. Saez said the tax diluted economic ownership, while shares could be structured to preserve control rights.¹³
Dave Regan, president of Service Employees International Union-United Healthcare Workers West, pledged to seek a billionaire tax again in 2028. His union sponsored Proposition 40, which voters rejected.¹²³
Wealth Tax Rejection Signals State Relocation Risks
If you are a founder or high-net-worth professional in California, the rejection of Proposition 40 confirms that state-level wealth taxes face intense, well-funded opposition. The campaign's $425m battle and the counter-measures show that any future attempt to tax billionaires will trigger a costly political fight. For your own career, this means California's tax environment is unlikely to change soon, but the threat of future proposals remains, as the union pledged to try again in 2028. If you are considering a move, weigh the risk of a future wealth tax against the state's economic opportunities.¹²³
For your own career, this means California's tax environment is unlikely to change soon, but the threat of future proposals remains, as the union pledged to try again in 2028.
For workers in healthcare or public services, the rejection means the projected $100bn for programs like Medi-Cal will not materialize. If you are in these fields, plan for continued reliance on federal funding, which faces cuts from the recent tax bill. The opposition's framing of the measure as an 'everyone tax' and the governor's concern about wealthy residents leaving suggest that future tax proposals will need to address migration fears to gain support. Consider how state budget constraints might affect your sector's funding and job security.¹²³
Sources
Written by Career Ahead AI. AI can make mistakes, so verify key facts. Report errors to support@careeraheadonline.com
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