California voters will decide on Proposition 40, a proposed one-time 5% tax on the net worth of billionaires, when they head to the polls on November 3. The measure, led by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), aims to fund healthcare services, public education, and food assistance programs. However, two competing initiatives—Propositions 41 and 42—are also on the ballot, backed by opponents including billionaires and Governor Gavin Newsom. If either rival measure receives more yes votes than Proposition 40, it could prevent the tax from taking effect.
Proposition 40 details
The tax would apply to California residents with a net worth exceeding $1 billion as of January 1, 2026, with an estimated 255 eligible taxpayers based on data from Altrata, a wealth-intelligence firm. The tax is based on total assets, including equity holdings in companies, rather than income. Taxpayers could opt to pay the tax in five annual installments, with a 7.5% annual deferral charge on unpaid balances. The first payments would be due in 2027. Supporters argue the tax could generate $100 billion, with 90% allocated to healthcare, while opponents warn it may drive wealthy individuals and businesses out of the state.
Opposition and relocation concerns
Critics, including Governor Newsom, argue the tax could trigger an exodus of wealthy entrepreneurs and investors, leading to job losses and economic strain. Several high-profile billionaires, including Google co-founders Larry Page and Sergey Brin, have reportedly relocated out of California since the proposal gained attention, though neither has explicitly cited the tax as the reason. The California Legislative Analyst’s Office estimates the tax would raise only “tens of billions” and could result in long-term income-tax revenue losses if wealthy individuals leave.
Rival measures and legal uncertainty
Propositions 41 and 42, both backed by opponents of Proposition 40, could supersede it if they receive more votes. The exact mechanisms for how these measures would interact with Proposition 40 remain unclear, as legal experts note the ballot language does not specify a hierarchy. The SEIU-UHW has framed Proposition 40 as a solution to prevent hospital and clinic closures, protect healthcare jobs, and support public education and food assistance programs.
Economic and policy implications
Economists and policymakers are divided on the potential outcomes. French economist Gabriel Zucman, a co-author of Proposition 40, has advocated for the tax as a way to address wealth inequality and fund social programs. However, critics compare the proposal to France’s wealth tax, which they argue contributed to economic strain and public unrest. The California Legislative Analyst’s Office has cautioned that the tax could have unintended consequences, including reduced state revenue if wealthy individuals relocate.
Timeline and next steps
Voters will cast ballots on November 3, with results determining whether Proposition 40 takes effect or if one of the rival measures prevails. The outcome could set a precedent for future wealth taxation policies in the United States.