California Voters Reject Billionaire Wealth Tax Amid Fears of an Exodus of the Wealthy

California voters turned down a proposed one-time 5% tax on billionaire wealth, ending, for now, a campaign that supporters said could have raised tens of billions of dollars for healthcare. The measure would have applied to people who were California residents on Jan. 1, 2026, with the payments spread across five years.

The vote came after some of the state's wealthiest residents warned they might leave California if the tax passed. The state has one of the largest billionaire populations in the country and leans heavily on high earners to fund its budget, so the prospect of losing more of them was a live concern for state finances.

The proposal had prominent backers. Sen. Bernie Sanders, I-Vt., and the Service Employees International Union–United Healthcare Workers West supported it, arguing the money could help offset Trump administration cuts to healthcare and food assistance. Gov. Gavin Newsom opposed it. His argument was that California should address wealth inequality without pushing billionaires out of the state.

Voters were also weighing Proposition 42, a separate measure backed by tech billionaires that would block new taxes on personal property. It was leading as the count continued. If it is approved, future attempts to tax billionaire wealth could become harder, though supporters of such taxes have vowed to keep pushing.

Wayne Winegarden, a senior fellow in business and economics at the Pacific Research Institute, said fears that the tax would not stay confined to billionaires may have cost it support. "A lot of messaging went around this: 'You're next,'" he said, adding that he thought it resonated, and that the tax was most likely not a one-time event.

He also pointed to a budget worry. Voters, in his view, may have feared that billionaire departures would leave less money for the rest of the state budget. "I think that message got out there, and I think that helped," he said.

Winegarden argued that defeating the tax should slow the departures tied to the proposal. But he said California remains very uncompetitive on taxes, and that the broader problem has not gone away.

The state is already losing taxpayers to other states. Los Angeles County, home to Hollywood and one of the country's largest economic engines, led the nation in taxpayer losses, with a net 17,496 filers leaving for other states and taking nearly $1.9 billion in income with them.

The outflow reached well beyond Los Angeles. Orange County recorded a net loss of 11,618 filers, San Diego County 9,401, Riverside County 8,968 and San Bernardino County 8,462.

The vote closes the latest push for a billionaire tax, but it does little to settle the larger argument over whether California can keep its wealth and investment at home. The next marker to watch is the final result on Proposition 42, and whether backers of the wealth tax follow through on their pledge to try again.