Full Breakdown
California’s Billionaire Wealth Tax: Proposition 40 and the Competing Ballot Measures
By Drooid · · How we work
Proposition 40 – The Core Proposal
Proposition 40 would impose a one-time 5 % levy on the net-worth assets of California residents whose wealth exceeds $1 billion as of January 1 2026. The tax targets stocks, bonds, artwork and other non-real-estate holdings; real estate, pensions and retirement accounts are exempt. Ninety percent of revenue would go to the state’s healthcare system, with the remaining ten percent for food-assistance or education programs. The measure appears on the November 3 ballot alongside Propositions 41 and 42, which could block it.
Background & Context
The initiative was drafted by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) after federal cuts to Medicaid threatened to remove roughly $30 billion per year in funding from California. SEIU-UHW argues the tax is needed to avert a “healthcare catastrophe” and replace lost federal dollars for Medi-Cal. This is the first billionaire-wealth tax on a statewide ballot in the United States.
Official Statements & Responses
- “A one-time tax creates no incentive for billionaires to leave the state and we felt that was important.” — Dave Regan, SEIU-UHW president
- Sen. Bernie Sanders (I-VT) urges voters to approve the measure, saying it could protect health coverage for 3 million Californians.
- Gov. Gavin Newsom opposes the billionaire tax and endorses Proposition 42, warning that “wealth is movable, and it shops for the state with the lowest taxes.”
- Chris Hoene, executive director of the California Budget & Policy Center, cautions that the impact on clinics and health-care workers “is not certain.”
Criticism & Opposition
- Enrico Moretti, UC Berkeley economist, argues billionaire flight would shift jobs to “red states” and weaken California’s economy.
- Joshua Rauh, Hoover Institution researcher, calls the tax “a fiscal and economic disaster” that could cost the state $25 billion in the long run.
- “It’s a little bit of a Rubik’s Cube.” — Chuck Bell, election law attorney
- Lynne Wines, Pasadena resident, warns that “taxes have a way of being needed over and over, and politicians have a way of finding those needs,” suggesting the levy could set a precedent.
On-the-Ground Reports
Local voters expressed mixed feelings. Pasadena retiree Lynne Wines worries about a slippery-slope precedent, while Steve Erler, a 74-year-old building manager, supports the measure because he fears federal cuts will hurt children and seniors.
Conflicting Reports & Gaps
Revenue estimates diverge sharply: proponents cite $100 billion, the Legislative Analyst’s Office cites “tens of billions,” and the Hoover Institution projects a net loss of $25 billion after accounting for billionaire migration. Polling shows a narrow and fluctuating margin of support. No definitive study has measured how many billionaires would relocate or how the tax would be administered.
What’s Next
Voters will decide on November 3 whether Proposition 40 passes and whether Propositions 41 or 42 receive enough votes to nullify it. The outcome will determine whether California secures a one-time infusion of wealth-tax revenue for health-care or maintains the status quo while facing ongoing federal funding cuts. Campaign spending is expected to intensify in the final weeks before the election.
