California Voters Reject First-of-Its-Kind Billionaire Wealth Tax in Costly Ballot Fight

California voters have turned down Proposition 40, a one-time tax on the net worth of the state's billionaires, ending a ballot fight that drew enormous spending from some of the most prominent figures in the tech industry. Voting concluded on Nov. 3.

The measure would have levied a single five per cent tax on the wealth of Californians with a net worth above $1 billion US. No state in the country has done anything like it. Most of the money would have gone to backfill federal cuts to health care, with 10 per cent set aside for education and food-assistance programs. SEIU United Healthcare Workers West, the state's health-care union, argued the tax was needed to replace an estimated $100 billion US that California is expected to lose in federal health-care funding over five years.

Proposition 40 was the largest test yet of an idea progressives have pushed for years: taxing the ultra-rich on the thing that actually makes them rich, their investments, rather than on a paycheque. Bernie Sanders, the Vermont senator, lent his weight to the campaign and held rallies in cities across California in the closing weeks. Sanders and Massachusetts Sen. Elizabeth Warren have long backed a federal wealth tax.

The money, though, ran the other way. The "no" side raised roughly 10 times as much as the "yes" side. A political action committee called Building a Better California, which also backed other ballot measures designed to nullify the tax, raised more than $333 million US, nearly a third of it from Google co-founder Sergey Brin. Brin alone put more than $100 million US into the effort.

Some billionaires acted before the vote. Brin and fellow Google co-founder Larry Page began cutting ties with California in anticipation of the possible tax. Facebook co-founder Mark Zuckerberg said he would stay in the state for eight years, and struck a deal with Meta to help him pay the tax without giving up his ownership stake in the company.

Opposition was not limited to the very wealthy. Planned Parenthood and the California Medical Association, both usually Democratic allies, joined a coalition against the measure. They worried about how the revenue would be divided and about what a mass exodus of wealthy taxpayers would do to the state budget, which leans heavily on income taxes paid by its richest residents. The coalition called the proposal "a reckless experiment conducted on our state's economy with little regard for the harms it would cause."

Robert Swonger, an independent voter and auto glass technician near Sacramento, said before the vote that he planned to vote no. "Obviously, I would like billionaires not to have as much money as they do," he said, but he did not believe "taxing them out of existence is going to work."

The result is a win for Democratic leaders who opposed the tax, among them Gov. Gavin Newsom, who is deciding whether to run for president in 2028. Newsom has said a California wealth tax would put the state at a disadvantage, though he supports a national minimum tax on anyone worth more than $100 million US. Days before Sanders's rallies, he told reporters the senator's focus on wealth inequality was "spot-on," but that "on this issue, we fundamentally disagree."

The fight may not be over for Newsom. Supporters of the tax have recently started running ads criticizing his opposition in New Hampshire, New Mexico and Virginia, states that will vote early in the 2028 Democratic presidential primary.