Key Notes
- Decision Desk HQ projects that California voters have rejected Proposition 40, with election certification still separate from the call.
- The measure proposed a one-time 5% tax on billionaires’ wealth, with payment due in 2027.
- Ninety percent of the proceeds would have been directed to healthcare, with the rest funding education, food assistance and tax administration.
California voters have rejected a proposed one-time 5% tax on billionaires’ wealth, according to a Decision Desk HQ projection, dealing a setback to a campaign that sought to raise billions of dollars for healthcare.
Bloomberg reported the call on November 7. At that point, an Associated Press tally showed about 54% opposed and 46% in favor, with roughly 71% of votes counted. The projection is separate from the state’s certification of the November 3 election.
Proposition 40 had split California’s Democratic leadership, drawn heavy spending from wealthy opponents and put the taxation of accumulated assets at the center of a fight over how to pay for public services.
A One-Time Levy on Billionaire Wealth
The measure would have applied to billionaires who were California residents on January 1, 2026. It proposed a tax equal to 5% of their net worth, rather than an annual surcharge on their income.
Under the state’s official analysis, payment would have been due in 2027, with an option to spread it over five years at additional cost. Real estate, pensions and retirement accounts generally would have been excluded.
For people whose fortunes are tied to company shares or private businesses, the assessment would therefore have reached assets they owned, even without a sale generating income. Its defeat removes that proposed charge without changing California’s existing income taxes.
Healthcare Funding Drove the Campaign
Ninety percent of the proceeds would have been reserved for healthcare. The remainder would have funded education, food assistance and administration of the tax.
The healthcare workers union backing the initiative, SEIU-United Healthcare Workers West, estimated it could generate about $100 billion over five years. The nonpartisan Legislative Analyst’s Office projected a temporary gain of tens of billions of dollars over several years.
The state’s analysts also identified a longer-term trade-off: responses such as billionaires leaving California could reduce annual income-tax receipts by less than $1 billion. The forecast weighed a large, temporary revenue source against a possible recurring loss.
A Costly Fight That Divided Democrats
Supporters argued that the state’s richest residents should help replace federal healthcare funding cuts. Governor Gavin Newsom opposed the proposal, joining critics who said a one-time levy would not resolve the state’s continuing budget problems and could encourage wealthy taxpayers to relocate.
In its election-week reporting, CalMatters said billionaire opponents and business interests had put $316.7 million behind efforts to stop the tax, including support for two competing ballot measures. The California Democratic Party and the state labor federation backed Proposition 40 despite opposition from Newsom and some other Democratic allies.
The divide exposed two competing approaches to the same funding problem: collecting more from a small group of very wealthy residents, or protecting the existing tax base from the risk of losing them.
The Debate Over Future Wealth Taxes Continues
A separate initiative, Proposition 42, would prohibit new state taxes on ownership of financial assets and other personal property and restrict some retroactive taxes. Its scope reaches beyond the single billionaire levy proposed in Proposition 40.
Backers of the healthcare tax have already signaled they may try again. SEIU-UHW President Dave Regan said the union would return in 2028 if California’s Legislature failed to provide another solution to the healthcare funding gap, according to CalMatters.
