Full Breakdown
California’s Proposition 40: One-Time Billionaire Tax on the Ballot
By Drooid · · How we work
Core Event
Proposition 40 proposes a one-time excise tax of 5 percent on the net worth of individuals who were California residents as of early 2026 and whose “covered assets” exceed $1 billion. Real-estate, pensions and retirement accounts are generally excluded. Ninety percent of the projected revenue would go to health-care programs; the remaining ten percent would fund food-assistance and education initiatives. The Legislative Analyst’s Office estimates the measure could raise “tens of billions of dollars” in the short term, while noting that possible billionaire out-migration might cut state income-tax revenue by less than $1 billion annually.
Background & Context
The initiative was placed on the ballot by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW). It would embed the tax in the state constitution, making later amendments more difficult. California’s legal framework already permits the Legislature to amend voter-approved measures when the amendment “furthers the purposes” of the original law, a practice applied to past initiatives such as the Mental Health Services Act (2004) and the Political Reform Act (1974).
Data & Statistics
- Threshold: $1 billion net worth; estimated 200-250 billionaires affected.
- Tax rate: 5 percent of covered assets, one-time.
- Projected revenue: “tens of billions” (LAO).
- Opposition funding: Building a Better California has raised $252 million, including $102 million from Google co-founder Sergey Brin, $30 million from venture capitalist John Doerr, and $27 million from former Google CEO Eric Schmidt.
- Supporter funding: SEIU-UHW contributed roughly $4 million, primarily from union affiliates.
Official Statements & Responses
Governor Gavin Newsom opposes the measure, arguing that a billionaire tax could be avoided by wealthy residents leaving the state and that a national approach would be more effective. Representative Ro Khanna criticized Newsom for allegedly prioritizing billionaire donors over working-class voters. SEIU-UHW president Dave Regan emphasized that the tax applies only to billionaires and dismissed opponent ads as “pure scare tactics.”
Criticism & Opposition
Former Reagan economic adviser Art Laffer warned that the tax “would destroy California” by prompting an exodus of the state’s wealthiest residents.
Legal and Amendment Concerns
Proposition 40’s text permits the Legislature to amend the measure when such changes “further the purposes” of the initiative. Attorneys Michael Colantuono and Chris Parker explain that California courts have broad latitude to interpret “reasonable construction” of voter intent, citing a 1995 Supreme Court decision that upheld similar amendments. Kurt Oneto, representing the “No on 40” campaign, argues that the measure’s findings and purpose statements were crafted to allow extensions consistent with the original intent.
Conflicting Reports & Gaps
Sources differ on the exact number of billionaires targeted—some cite ?200 while others mention ?250. Revenue projections range from a vague “tens of billions” to unspecified short-term figures, leaving the precise fiscal impact unclear. The extent to which future legislative amendments could lower the wealth threshold or convert the one-time levy into a recurring tax remains unsettled.
Verbatim Quotes
- “It is the single most important proposition on ballot today in America. It really is a big, big deal, this wealth tax. And it would destroy California, it really would,” — Art Laffer, Reagan economic advisor
- “The billionaire tax is a tax on billionaires. Period. If you’re not a billionaire, you don’t pay the tax,” — Dave Regan, president of SEIU-UHW