Full Breakdown
California’s Billionaire Tax Battle: Proposition 40, Funding Wars, and Competing Measures
By Drooid · · How we work
Core Event
Proposition 40 would impose a one-time 5 % tax on the net worth of Californians whose assets exceed $1 billion, applying to anyone who was a resident on January 1 2026. Ninety percent of any revenue would be earmarked for health-care programs; the remaining ten percent for education and food-assistance initiatives.
Background & Context
The measure was drafted by economists Emmanuel Saez, Gabriel Zucman, David Gamage, Brian Galle and Darien Shanske and sponsored by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) to offset federal health-care cuts. Supporters include Senator Bernie Sanders, Representative Ro Khanna and several health-care unions. Opposition is led by Governor Gavin Newsom, Planned Parenthood Affiliates of California, the California Medical Association and a coalition of tech billionaires organized through the Building a Better California Super PAC.
Timeline
- 2025 – Proposition 40 filed and cleared for signature gathering.
- Mid-2026 – Sufficient signatures collected; the measure qualifies for the ballot.
- September – Polls show the “yes” lead narrowing.
- December 10 – Google co-founder Sergey Brin changed his voter registration to Nevada to avoid the tax.
- November 3 2026 (scheduled) – Voters decide on Proposition 40 and competing Propositions 41 and 42.
Data & Statistics
- Opponents have raised more than $340 million, including $102 million from Brin and over $42 million from Eric Schmidt.
- The “yes” campaign has raised just under $33 million, primarily from health-care unions.
- Opposition spending exceeded $1 million per day in September, per state filings.
- UC-Berkeley polling in late September reported 45 % support versus 42 % opposition; a later Manhattan Institute poll gave the “no” side a 15-point lead.
- Prediction-market odds place passage at roughly 25 %.
Why It Matters / Impact
Supporters claim the tax could generate “tens of billions” and possibly up to $100 billion over five years, funding Medi-Cal and preventing clinic closures. Critics warn of a “wealth exodus” that could cut the state’s income-tax base and cost an estimated $25 billion in long-term revenue. Even if Prop 40 wins, Propositions 41 and 42 contain “poison-pill” provisions that would nullify the wealth tax if they receive more votes.
Official Statements & Responses
- “Our approach to defeat Proposition 40 is based on a comprehensive strategy that includes both the ballot box and the courts.” — Rob Lapsley, CEO, California Business Roundtable
- “Californians deserve to have their retirement and life savings protected from new state taxes.” — Gavin Newsom, Governor
Conflicting Reports & Gaps
Revenue projections range from “tens of billions” (official analyst) to $100 billion (supporters) and $30-40 billion (independent economists). Polling shows a shifting electorate, while prediction markets suggest a low likelihood of passage. No definitive estimate exists for the net fiscal impact after accounting for potential billionaire migration.
What’s Next
On November 3 2026, voters will decide the fate of Proposition 40 alongside Propositions 41 and 42. Opponents have pledged immediate legal challenges, with the California Business Roundtable and other groups preparing lawsuits that could reach the state and U.S. Supreme Courts. The outcome will shape California’s health-care financing and the national conversation on wealth taxation.
