California Voters Reject Proposition 40 Billionaire Wealth Tax

California voters have rejected Proposition 40, a high-stakes ballot measure that proposed a one-time five per cent tax on the net worth of the state’s billionaires, according to a race call by NPR.

The decisive defeat brings an end to what was the most expensive ballot measure campaign in state history, according to reporting from The Guardian.

California Voters Defeat Proposition 40 Billionaire Wealth Tax

The measure had drawn intense national attention as the nation’s largest test yet of progressive efforts to target investment wealth rather than work paychecks. However, the proposal deeply fractured the Democratic Party in a state where Democrats heavily outnumber Republicans.

Proponents Argued for Proposition 40 to Fund Health Care

Proponents of Proposition 40 argued that the levy was necessary to backfill an estimated $100 billion shortfall in federal health care funding over five years. Sponsored by the healthcare union SEIU-United Healthcare Workers West, the initiative dictated that ninety per cent of the generated revenue would fund health care programs, with the remaining ten per cent designated for education and food-assistance programs.

The proposal attracted backing from major state unions and prominent progressive figures, including Vermont Senator Bernie Sanders, who held rallies in California cities in the closing weeks of the race, and California Congressman Ro Khanna. The Democratic Socialists of America also supported the measure, framing it as a temporary wealth tax on roughly 250 of the state’s richest individuals.

Conversely, the measure was opposed by Democratic Governor Gavin Newsom, the Democratic candidate for governor, and organizations such as Planned Parenthood Affiliates of California and a leading teachers union.

Opponents argued that the levy would place California at a competitive disadvantage and drive ultrawealthy taxpayers out of the state. Critics also pointed out that the proposal was structured as a one-off tax funding specific health care items rather than long-term structural needs.

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The opposition campaign mounted a nearly $425 million battle against Proposition 40, raising roughly ten times as much as the “yes” side. Wealthy donors from Silicon Valley—including executives from Google, DoorDash, Stripe, Reddit, and Palantir, alongside prominent venture capitalists—poured millions into a political action committee named Building a Better California.

Google co-founder Sergey Brin emerged as the single largest donor, contributing more than $100 million according to CBC, and over $132 million according to campaign finance filings cited by The Guardian.

As part of their strategy, opponents placed two separate counter-measures on the ballot, Proposition 41 and Proposition 42. These measures were designed to limit revenue use and restrict personal asset taxation, effectively serving as “poison pills” intended to block the billionaire tax from taking effect even if it had won voter approval.

Proposition 40 Defeat Slows Momentum for State Wealth Taxes

The defeat of Proposition 40 slows nationwide momentum for state-level efforts to tax the ultra-wealthy. While Governor Newsom opposed the state-level wealth tax, arguing it would disadvantage California, he has voiced support for a national minimum tax on individuals with a net worth above $100 million.

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Meanwhile, federal lawmakers continue to push national alternatives, such as the Khanna-Sanders Make Billionaires Pay Their Fair Share Act, which proposes a permanent annual tax on net worth exceeding $1 billion rather than a one-time levy.