5% one-time tax on billionaire wealth: what to know about California's Prop 40
How the tax would work
The state voter guide estimates the tax would affect roughly 200 billionaires in California. The Legislative Analyst’s Office projects it could generate tens of billions of dollars.
Supporters and critics disagree
Opponents say the tax could prompt billionaires to leave California, reducing state revenue over the longer term and weakening the measure’s near-term benefits. Some also point to potential legal challenges, describing the proposal as a first-of-its-kind wealth tax.
Democratic Gov. Gavin Newsom is the measure’s most prominent opponent. His spokesperson said Newsom supports a national tax on billionaires but opposes the state proposal, which the statement described as poorly written and harmful to California.
Political and financial backing
The proposal has divided political figures and billionaires. Rep. Ro Khanna called Prop 40 “the most important ballot initiative in America” in a post on X last month.
Building a Better California, the leading organization opposing the measure, has raised hundreds of millions of dollars, mostly from billionaires, according to public financial records. Google co-founder Sergey Brin and venture capitalist John Doerr are among its top contributors. Nvidia CEO Jensen Huang told Bloomberg Television he had not thought about the proposed tax and said he was fine with whatever taxes California chose to apply.
Key points
- Prop 40 proposes a one-time 5% tax on wealth held by California taxpayers and trusts with assets above $1 billion.
- The tax would fund healthcare, food assistance and public education, with revenue intended mainly to offset healthcare cuts.
- The state voter guide estimates roughly 200 billionaires would be affected; the Legislative Analyst’s Office projects tens of billions in revenue.
- Critics warn of potential billionaire departures and legal challenges, while supporters cite the need for public funding.