A one-time tax on billionaires falls as California voters reject Proposition 40, a blow to the left

What Proposition 40 proposed

Proposition 40 called for a 5% tax on assets held by California residents with net worths above $1.1 billion. It also included the option of a smaller, phased-in tax for people worth between $1 billion and $1.1 billion.

The measure would have required California to put 90% of the revenue toward healthcare. The tax would have applied retroactively to people living in the state on Jan. 1, 2026.

A divided political debate

The proposal split Democrats in California and across the country as the party considers its direction ahead of an open presidential contest. Supporters included Sen. Bernie Sanders, I-Vt., and Rep. Ro Khanna, D-Calif., who held rallies in the state before Election Day.

Opponents from both parties warned that wealthy residents could leave California in large numbers. They argued that an exodus would reduce other tax revenues and worsen budget problems.

Campaign spending and opposition

The campaign against Proposition 40 included substantial advertising funded by billionaires who would have been affected, particularly in Silicon Valley. The largest spender, No on Prop. 40, was a coalition that included the California Teachers Association, the California Medical Association and Planned Parenthood, and it received contributions from several billionaires. Other groups received millions from Google co-founder Sergey Brin and the California Business Roundtable.