California voters decide Prop 40, a first-ever tax on billionaires
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The gist
California voters decided Prop 40, a one-time tax on billionaires, needing a simple majority to pass.
It would be America's first wealth tax, and revenue estimates are sharply disputed.
Background
Prop 40 would create America's first-ever wealth tax targeted at billionaires, pushed by Service Employees International Union-United Healthcare Workers West, a California health workers union whose president Dave Regan is described as the measure's brainchild. Supporters say the revenue would mainly offset healthcare cuts enacted in President Donald Trump's signature tax legislation. It is trending because California voters decided it on Election Day, and because opponents put a rival measure, Prop 41, on the same ballot to try to cancel it out.
How it unfolded
- Jan 1, 2026Prop 40 would apply retroactively to any billionaire who was a California resident on this date.
- Feb 18, 2026U.S. Sen. Bernie Sanders led a rally at The Wiltern in Los Angeles during the campaign kickoff for the California Billionaire Tax Act.
- Oct 5, 2026Ballot drop-off boxes opened around California and stayed open through 8 p.m. on Nov. 3; a rally against Prop 40 was held at the Iron Workers Apprenticeship Training Center in La Palma, CA.
- Nov 3, 2026California voters decided Prop 40 on Election Day; polls closed at 8 p.m. and a simple majority was needed for it to succeed.
- Dec 31, 2026If Prop 40 survives, billionaires who lived in California on Jan. 1, 2026 would be assessed the tax based on their net worth as of this date.
Who’s saying what
- Support
- Proponents say a one-time tax on billionaires would enlist the state's wealthiest to help ease the cost burden on public assistance programs hit by federal and state cuts.
- Party
- The union pushing the measure estimates it would raise about $100 billion over five years for healthcare and education.
- Analysts
- The nonpartisan Legislative Analyst's Office estimates the tax would raise 'tens of billions of dollars' over several years, well short of the union's projection, while billionaires leaving could cut income tax revenue by less than $1 billion a year.
- Caution
- Opponents say billionaires already pay a large share of state taxes and worry the tax could drive them out of California and harm the state budget.
- Bears
- Economist Rauh says 'on net, the state loses $39 billion in expectation because of this tax.'
- Bulls
- Economist Zucman says that calculation counts future income tax losses from billionaires fleeing but none of the revenue hypothetical wealth taxes would bring in, calling it 'absurdly one-sided.'
Still unverified
Some members of SEIU California have accused Regan of threatening and intimidating women over the years and of attempting to 'extort' support for the measure, according to an internal investigation commissioned by SEIU California and SEIU; Regan and the union call the allegations 'categorically false' and a 'smear campaign.' The California Primary Care Association alleged in a recent lawsuit that the health workers union violated anti-racketeering laws in part by asking clinics to support the billionaire tax in exchange for killing the clinic initiative. Whether Prop 40's provisions to stop billionaires from escaping the tax would actually work is also disputed.