California voters rejected the California billionaire tax on Monday, turning down Proposition 40, a one-time 5 percent levy on the wealth of residents worth more than $1 billion. The Associated Press called the race after counting showed the measure trailing by a wide margin. With most votes counted, 52.9 percent voted against the measure and 47.1 percent in favour. The result ends the first attempt in the United States to tax billionaire wealth at state level.
How the California billionaire tax would have worked
Proposition 40 would have imposed a one-time tax of 5 percent on the net worth of Californians worth more than $1 billion. The tax would have applied to anyone who lived in California on 1 January 2026, so a billionaire who stayed past that date would have owed it even if they later moved away. The money would have gone largely to health care, above all to Medi-Cal, the state Medicaid programme that covers low-income residents.
Supporters said the California billionaire tax would raise about $100 billion over five years. The money would have helped offset federal cuts to taxpayer-funded health care. The measure would have taxed wealth itself, including stocks, collectibles and artwork, rather than income. About 200 billionaires live in the state, and the tax would have touched only that group. It would have been the first tax of its kind in the country.
The campaign behind the California billionaire tax was led by the union SEIU-United Healthcare Workers West. It gathered 1.6 million signatures to put the measure on the ballot, nearly double the number required, and the measure qualified in June. Senator Bernie Sanders backed it. Voting closed on 3 November, during the midterm elections, and counting ran on for days before the Associated Press called the result.
Spending on the California billionaire tax fight
Opponents of the California billionaire tax spent far more than supporters. Building a Better California, a political action committee funded by billionaires, raised more than $333 million against the measure. Google co-founder Sergey Brin alone put more than $100 million into that committee, nearly a third of its total. TechCrunch reported that spending by billionaires against the measure reached as much as $379 million.
The money paid for adverts warning that the California billionaire tax would push rich residents out of the state and hurt California’s budget in the long run. Supporters argued that a 5 percent charge on fortunes above $1 billion would barely dent those fortunes, and that the health care funding mattered more. The spending gap was wide, and the no side held its lead from election night through the final count.
Governor Gavin Newsom opposed the measure, and his stance carried weight. Newsom argued that a state wealth tax would put California at a disadvantage. His opposition split Democrats, since the measure’s backers came largely from the party’s labour wing. The governor is widely seen as a possible candidate for president in 2028, and his position on the tax drew close attention in that light.
Why Governor Newsom opposed the measure
Newsom’s argument rested on competition between states. California already takes in about $3 billion a year from its richest residents through income tax, roughly 1 percent of state revenue. The governor and other opponents said the California billionaire tax would give billionaires a reason to leave, and that the state would lose their future income tax as well. Supporters said the January 2026 cut-off date closed that door, since anyone resident on that date would owe the tax wherever they moved.
The vote split by age as well as by place. An Associated Press voter poll found that most voters under 30 backed the measure, while about 7 in 10 voters aged 65 and older voted against it. San Francisco stood out from the statewide result, backing the measure by about 56 percent to 44 percent. In most of the rest of the state, the no side won.
What happens next
A second measure on the same ballot now blocks a repeat of the California billionaire tax. Proposition 42, a countermeasure backed by billionaires, passed. It restricts new taxes on personal property in California, which makes a fresh wealth tax harder to put to voters. Supporters of the tax said they could put a similar measure back on the ballot in 2028. The union behind Proposition 40 has vowed to try again if the legislature fails to deliver a solution for health care funding.
The defeat of the California billionaire tax is a setback for progressives who want to tax the wealth of the ultra-rich. It also shows the limits of a ballot fight in which one side can spend hundreds of millions of dollars. The state keeps its billionaires, its budget pressures, and no dedicated tax on their wealth.