Full Breakdown
Proposition 40: One-Time 5 % Billionaire Wealth Tax
By Drooid · · How we work
Background & Context
Proposition 40, drafted by Service Employees International Union-United Healthcare Workers West (SEIU-UHW), would levy a one-time 5 % tax on the net worth of California residents with assets over $1 billion as of Jan. 1, 2026. Ninety percent of the revenue is earmarked for health-care programs; the remaining ten percent would fund education and food-assistance initiatives. The measure qualifies for the Nov. 3, 2026 ballot.
Key Figures & Groups
- Ro Khanna (D-Fremont) – backs Proposition 40.
- Gov. Gavin Newsom – opposes the tax, warning of “wealth flight.”
- Dave Regan – SEIU-UHW president and architect of the measure.
- Sergey Brin – Google co-founder; contributes over $100 million to the “Building a Better California” coalition that funds counter-measures.
- Jensen Huang – Nvidia CEO; says he would be “perfectly fine” with paying the tax.
- Six Nobel laureates (including Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman, Joseph Stiglitz) – signed a letter supporting the proposal.
Data & Statistics
- An IGS poll (Sept. 15-20, 2026) found 45 % support, 42 % oppose, 13 % undecided.
- A PPIC survey reported 52 % support.
- SEIU-UHW estimates the tax could raise about $100 billion; the Legislative Analyst’s Office projects “tens of billions” and notes a possible reduction of less than $1 billion in annual income-tax revenue if billionaires relocate.
- California has roughly 250 billionaires; the tax would apply to those residing in the state on Jan. 1, 2026.
Official Statements & Responses
Supporters argue the tax is a stopgap to prevent a “health-care catastrophe” from federal Medicaid cuts. SEIU-UHW emphasizes that the revenue would backfill Medicaid shortfalls and fund education. The California Democratic Party and the California Federation of Labor have endorsed the measure, citing wealth inequality and the need for stable funding. Gov. Newsom, in a June Substack post, contends that wealth is mobile and warns the tax could drive high-income residents and businesses out of California, eroding the state’s tax base.
Criticism & Opposition
Opponents—including Gov. Newsom, the California Medical Association, the California Teachers Association, and Planned Parenthood affiliates—label the proposal a “flawed, reckless tax.” They argue it offers only temporary revenue and could incentivize billionaire relocation, reducing future tax receipts. Billionaire donors such as Sergey Brin have financed the “Building a Better California” campaign, which also backs Propositions 41 and 42 designed to nullify the wealth tax. Critics cite studies suggesting only a small fraction of high-net-worth individuals move states for tax reasons.
Conflicting Reports & Gaps
Poll results diverge: the IGS poll shows Proposition 40 trailing a majority, while the PPIC poll indicates a modest majority in favor. Revenue estimates also conflict, ranging from “tens of billions” to the $100 billion figure cited by proponents. No definitive data exist on how many billionaires would actually relocate if the tax passed, and the long-term fiscal impact on state income-tax collections remains uncertain.
What’s Next
Ballots will be mailed to California’s 23.2 million registered voters in early October, with the final decision on Propositions 40, 41, and 42 to be made on Nov. 3, 2026. The outcome will determine whether the one-time wealth levy takes effect or is nullified by either counter-measure.
