Record-setting campaign ends in defeat as California voters reject Prop. 40 billionaire tax measure
Healthcare at the Center
Supporters said the measure would provide money to help counter federal healthcare reductions enacted in 2025 under H.R. 1, also called the “One Big Beautiful Bill Act.” They argued that hospitals, emergency rooms, clinics and Medi-Cal services needed protection.
Proponents also said billionaires can gain wealth through rising stock prices and business valuations without owing income tax on those increases before selling or realizing them. They argued that people who gained most from California’s economy should contribute more to public services.
Opponents Warn of Departure
Newsom and Porter, despite supporting higher taxes on corporations and wealthy people, agreed with concerns that the proposal might prompt wealthy residents to leave California. They warned that a shrinking tax base could harm the state’s long-term finances.
Newsom has favored taxing billionaires nationally, saying a California-only tax would be restricted to healthcare rather than other public needs. Opponents also said the measure did not guarantee how revenue would be divided among providers and services.
Spending and Competing Measures
Wealthy opponents gave tens of millions of dollars toward defeating Proposition 40. Much of the funding went to Building a Better California, which had raised more than $250 million against the tax by Oct. 28.
Some campaign money also supported Propositions 41 and 42. Those measures would limit special taxes and could block the billionaire tax from taking effect if either received more votes than Proposition 40.
Key points
- CBS News projects California voters rejected Proposition 40, a tax on the state’s wealthiest residents.
- Supporters said the revenue could help protect healthcare services after federal cuts enacted in 2025.
- Building a Better California had raised more than $250 million against the measure by Oct. 28.
- Propositions 41 and 42 could block the tax if either received more votes than Proposition 40.