California voters rejected Proposition 40, a proposed one-time 5% wealth tax on state residents with a net worth exceeding $1 billion, following a campaign that drew nearly $400 million in opposition spending.
The Associated Press called the defeat late Monday, showing the measure down by over five percentage points with 83% of votes counted.
California Proposition 40 Defeat
The ballot initiative would have applied to roughly 200 to 250 billionaires in the state, with proponents estimating it could raise $100 billion. Supporters intended the revenue to address a projected $20 billion annual shortfall for the Medi-Cal program following federal healthcare spending cuts from the One Big Beautiful Bill Act. Critics, however, argued the policy would drive wealthy residents and their businesses out of California.
Prop 40 is the most important ballot initiative in America. A 5% tax on the 989 billionaires in our country would raise $4 trillion. We have to ask a basic question: Are we going to be New Deal Democrats or donor class Democrats? pic.twitter.com/0s7HmfC0DQ
Google co-founder Sergey Brin contributed just over $100 million to defeat the tax, while former Google CEO Eric Schmidt gave more than 48 million dollars. Opponents argued the measure would harm the state economy and startup culture. In comparison, the pro-Prop 40 camp, sponsored by the union SEIU-United Healthcare Workers West, raised just over 31 million dollars, leaving the measure outspent nearly 14-fold.
Did You Know? Prior to the vote, healthcare workers and allies held a media briefing in Los Angeles on April 27, 2026, announcing they had collected more than 1,500,000 signatures from across the state to qualify the Billionaire Tax for the November ballot.
We dodged a bullet on this asset seizure tax. With any luck Prop 42 will pass. Builders of tech in California had a good day yesterday: we want abundance and asset seizure is the one guaranteed way to kill the golden goose. Huge thanks to Sergey Brin here. https://t.co/HIznVbS14W
Divided views on why Proposition 40 failed
Economists and political figures remain sharply divided on why Proposition 40 failed despite widespread polling support for wealth taxes. Gabriel Zucman blamed the corrosive influence of money for the measure’s failure, noting that opponents spent almost $400 million fighting it. Joshua Rauh countered that voter skepticism went beyond money, saying, “The electorate even in progressive California has shown that it isn’t ready for a wealth tax.”
Rauh suggested that voter proximity to billionaires and the businesses they fund created skepticism regarding the tax. Prominent Democrats also opposed the measure, including outgoing Governor Gavin Newsom and Governor-elect Xavier Becerra. Newsom argued that billionaires would both dodge the tax and leave the state, proposing instead a national tax on billionaires.
Expert Insight: The clash over Proposition 40 highlights a deep strategic division within the Democratic Party over how to address income inequality. While progressive lawmakers and labor unions continue to champion state-level wealth levies to protect public services, moderate leaders and wealthy donors warn that unilateral state taxes risk triggering capital flight and eroding the local tax base.
Future Wealth Tax Prospects
Supporters and analysts expect wealth taxation to remain a prominent issue in national politics ahead of the 2028 election cycle. The debate over a wealth tax could foreshadow a bigger one in the next Democratic presidential primary.
Meanwhile, questions remain over whether a wealth tax qualifies as a “direct tax” under the Constitution, an issue raised in an early Supreme Court case involving a tax on horse-drawn carriages that George Washington signed into law in 1794.
Questions about Proposition 40 wealth tax and contributors
How much was the proposed wealth tax under Proposition 40?
Proposition 40 proposed a one-time 5% wealth tax on California residents and trusts with assets exceeding $1 billion, taking effect on January 1, 2026.
Who were the major financial contributors against Proposition 40?
Google co-founder Sergey Brin contributed just over $100 million to a political committee opposing the tax, and former Google CEO Eric Schmidt gave more than 48 million dollars.
What happened to Proposition 42 on the same ballot?
Voters also considered Proposition 42, an initiative backed by opponents of the wealth tax designed to amend the state constitution and eliminate California’s ability to levy future taxes on personal property.
How will future tax policy proposals balance state-level revenue needs and the mobility of ultra-high-net-worth individuals?
Earlier coverage: California Voters Defeat Billionaire Tax Measure Prop 40