November 5, 2026 09:00 AM PST
(PenniesToSave.com) – California voters appear ready to turn down Proposition 40, a one-time 5% tax on residents whose assets top $1 billion. As of Wednesday afternoon, the measure trailed by more than 11 percentage points with roughly 60% of votes counted, though the race had not been formally called [1]. The Associated Press tallied more than 4.2 million votes against it, putting the no side at 55.6% [2].
Yahoo Finance estimated the tax would have reached about 200 billionaires [1], while materials from the Democratic Socialists of America put the figure at 250 [3]. The fight drew money on a scale rarely seen in state politics. Current and former California billionaires spent a record $612 million across this year’s state election, according to Politico [5]. The outcome also reaches well past one state’s border. Commentators on both sides treated California as a test case for wealth taxes [4], and the likely result will shape how the idea is argued in other statehouses and in Washington.
Quick Links
- What Would Proposition 40 Have Done?
- Why Did Opposition Cross Party Lines?
- How Much Money Shaped the Outcome?
- Do Wealth Taxes Push Taxpayers Out of State?
- What Could Proposition 42 Mean for Future Tax Fights?
- Could a Wealth Tax Reach Beyond Billionaires or Beyond California?
What Would Proposition 40 Have Done?
Proposition 40 was a proposed amendment to California’s constitution, sponsored by the SEIU-United Healthcare Workers West union [4][5]. It would have imposed a one-time 5% tax on California residents and trusts holding more than $1 billion in assets [1]. The tax would have applied to billionaires who lived in California on Jan. 1, 2026, a date that fell ten months before voters weighed in. Fox News reported the retroactive residency date was designed to keep billionaires from simply leaving the state ahead of the vote [3].
The tax base was broad. It would have covered businesses, securities, art, collectibles and intellectual property [3]. Real property was excluded, along with certain pensions and retirement accounts [1][3]. According to California’s Legislative Analyst’s Office, taxpayers could have spread their payments over five years, though doing so would have cost more [2].
The measure’s text directed 90% of the revenue to healthcare and the remaining 10% to education, food assistance and administration of the tax [3]. Supporters estimated it would raise about $100 billion [2]. The DSA tied that figure to a projected federal funding shortfall for Medi-Cal, the state program that provides health coverage for low-income residents, seniors and people with disabilities [3].
One provision drew particular scrutiny. A CalMatters commentary noted that a two-thirds supermajority of the Legislature could revise the tax later, so long as the changes were consistent with the purposes of the act [4]. That clause became a central point of attack for opponents in the final weeks of the campaign.
Why Did Opposition Cross Party Lines?
Prop 40 did not divide neatly along party lines. Gov. Gavin Newsom, a Democrat, opposed it, arguing it would put California at a competitive disadvantage [3]. He also warned that the tax would drive billionaires out of the state and take their tax dollars with them [2]. CalMatters reported that Newsom joined the no campaign more than a year before the election [4].
It’s a badly written initiative.
Gov. Gavin Newsom, speaking to Fox News Digital [3]
Opposition also came from groups that typically align with Democrats. The California Teachers Association and Planned Parenthood Affiliates of California opposed the measure, arguing it could hurt state finances by driving wealthy taxpayers away, according to CalMatters reporting cited by People [2]. Newsom told Fox News Digital that firefighters and most of organized labor opposed it as well [3]. The California Democratic Party, by contrast, narrowly voted to endorse it [2].
Independent analyses raised doubts about the revenue math. Newsom cited the Legislative Analyst’s Office, which estimated the measure might temporarily boost state revenue but could drag on regular income tax collections, reducing revenue by less than $1 billion per year [1]. A Hoover Institution report projected income tax losses and far less money than proponents promised, according to CalMatters [4].
Newsom’s position came with a caveat. A spokesperson said the governor supports a national tax on billionaires [2], and Newsom told Fox News that a federal approach is a very different conversation from a state-by-state one [3].
How Much Money Shaped the Outcome?
Google co-founder Sergey Brin led the opposition [5] and reportedly contributed about $102 million to a political committee fighting the measure [1][2]. Estimates of total spending vary by source. Sen. Bernie Sanders, who campaigned for the measure, put billionaire spending at more than $200 million [2]. A Los Angeles Times analysis found billionaires contributed $293 million to oppose Prop 40 and support related countermeasures [2]. Politico described an opposition campaign of more than $300 million [5], while a CalMatters commentary put the amount raised at $379 million [4]. The Guardian reported the opposition spent more than $1 million a day during the first 19 days of September [2].
That spending sat inside a larger wave. Politico found that current and former billionaires spent a record $612 million on California’s state election overall, a total that included Tom Steyer’s unsuccessful primary campaign for governor, which cost more than $200 million [5]. In Texas, Elon Musk spent more than $200 million to keep a Senate seat in Republican hands, and voters flipped it to Democrats anyway [1].
Politico’s review of the state voter file adds context about the donors themselves. Of 166 billionaires matched to the file, 36% were registered Democrats compared with 45% of voters statewide, and 39% listed no party preference compared with 23% statewide [5]. More than 60% voted in each of the last three presidential elections [5].
Supporters read the money as the story. Sanders framed the contest as a test of whether democracy or billionaires would prevail [2], and CalMatters commentary argued the result shows a political system overrun by money [4]. Opponents of the measure can point to a simpler fact: Yahoo Finance reported the measure lost steam with voters as Election Day neared [1].
Do Wealth Taxes Push Taxpayers Out of State?
Prop 40 put a long-running question back on the table: does taxing the very wealthy at the state level cause them to move? Meta CEO Mark Zuckerberg faced an estimated tax bill of about $12.4 billion based on an estimated $247 billion net worth [2]. Accounts of his response differ. The New York Times reported that he told Meta’s board it needed to take steps to shield him from the tax or he would publicly list his Palo Alto home for sale [1]. CBS News, citing a Meta regulatory filing, reported that he threatened to leave California and that the board approved a new class of nonvoting stock he could sell to pay the tax without giving up voting control [2].
In December 2025, the Times reported that Google co-founder Larry Page and venture capitalist Peter Thiel were considering spending less time in California [2]. Whether anyone actually left remains disputed. CalMatters commentary asserted that Brin, Page and Thiel did leave [4], Politico reported that at least some billionaires attempted to [5], and Newsom said people have already left the state [3].
The stakes for everyone else come down to how concentrated the tax base is. Billionaires pay as much as $5.8 billion a year of the roughly $123 billion California collects in income tax, according to the Hoover analysis cited by CalMatters [4]. Critics of the measure argue that departures from such a narrow base would leave a gap for remaining taxpayers to cover, pressure that eventually reaches the average household budget. Richard Stern, an economist with Advancing American Freedom, argued that billionaire wealth sits in companies, factories and equipment rather than cash [3].
Others push back on the flight argument. Cornell sociologist Cristobal Young, cited by CalMatters, contends that decades of research show the wealthy threaten to leave far more often than they actually do [4]. Nvidia CEO Jensen Huang said he does not mind his roughly $8 billion bill spread over five years [2].
I’m not afraid of paying taxes. I’m just afraid of being poor.
Nvidia CEO Jensen Huang, on CBS Sunday Morning [2]
What Could Proposition 42 Mean for Future Tax Fights?
Prop 40 was not the only tax question on the ballot. Opponents introduced two competing measures, Propositions 41 and 42, to prevent the wealth tax from taking effect [1]. Prop 42 would prohibit new state taxes on personal property and restrict certain retroactive taxes [3]. It appeared on track to pass as of Wednesday [3][4].
CalMatters commentary credited Brin with backing the countermeasure [4], and Newsom urged voters to support it [3]. The amendment clause in Prop 40 helped its cause. According to CalMatters, concern that lawmakers could later expand the wealth tax made Prop 42 an easier sell [4].
Its reach may outlast the Prop 40 fight. If Prop 42 passes, a similar wealth tax would become nearly impossible to enact in California, according to the CalMatters commentary [4]. That is a significant shift in how the state can pursue new revenue. Prop 40’s Jan. 1, 2026 residency date is precisely the kind of retroactive feature Prop 42 restricts [3].
For property owners and investors, the change is about predictability. A tax that looks back to a date before voters approved it raises a basic fairness question about whether people can plan their finances under the rules in place at the time. A ban on new state taxes on personal property, paired with limits on retroactive taxes, would set clear guardrails on that kind of policy, and those guardrails would apply to any future target, not only to billionaires [3].
Could a Wealth Tax Reach Beyond Billionaires or Beyond California?
For most households, the key question is whether a tax like this stays limited to the very top. During the campaign, opponents ran ads claiming lawmakers could use the two-thirds amendment clause to go after retirement accounts, CalMatters reported [4]. The measure as written excluded certain retirement accounts and pensions [1][3], and the CalMatters commentary dismissed the idea that seven in ten lawmakers would extend the tax to people with smaller holdings [4]. Even so, the episode showed how much weight voters place on the security of their own savings.
The national picture matters too. Tuesday’s results included wins by Democratic Socialists of America candidates, many of whom ran on explicitly anti-billionaire platforms. At least seven DSA members will take seats in Congress next year, and DSA candidates won the mayor’s offices in Los Angeles and Washington, D.C. [1]. A DSA slideshow argued that California already has enough money for schools and healthcare and that the task is to redirect it by taxing the rich [3]. The same materials claimed billionaire wealth grows 7% to 8% a year, so a 5% levy would only slow that growth [3].
Newsom’s openness to a national tax [2][3] raises its own concerns. Stern argued that a federal version would not solve the flight problem but move it overseas, with wealthy Americans giving up citizenship rather than a state address [3]. The practical items to watch are whether other states copy California’s approach, how future proposals define exempt retirement savings, and whether lawmakers again rely on residency dates set before a vote.
Final Thoughts
California’s billionaire tax looks headed for defeat, though about 40% of votes remained to be counted in the latest reported results and the race had not been formally called [1]. The final margin may shift, but an 11 point deficit is a steep hill for any ballot measure to climb this late in the count.
The likely outcome rejects one state’s version of a wealth tax rather than the idea itself. Newsom has said he favors a national approach [2], DSA candidates gained ground in Congress and in big-city mayor’s offices [1], and supporters have framed the result as a referendum on money in politics [4]. Each of those threads points toward more debate, not less.
The more lasting change may come from Prop 42. If its lead holds, new state taxes on personal property and certain retroactive taxes would face firm limits in California [3], and a similar wealth tax would become far harder to pass [4]. For households anywhere, the question going forward is less about billionaires and more about where the line on taxing savings and investments is drawn, and who gets to move it.
Works Cited
[1] Werschkul, Ben. “California’s Billionaire Tax on Track for Defeat as the State Continues to Count Votes.” Yahoo Finance, 4 Nov. 2026, finance.yahoo.com/economy/article/californias-billionaire-tax-on-track-for-defeat-as-the-state-continues-to-count-votes-190840319.html.
[2] Lian, Esther. “California’s Billionaire Tax Likely to Lose as Voters Reject Efforts to Tax Wealthy Citizens 5% of Their Net Worth.” People, 4 Nov. 2026, people.com/california-billionaire-tax-likely-to-lose-voters-reject-efforts-tax-wealthy-citizens-5-of-net-worth-12236569.
[3] Briceno, Leo, and Paul Steinhauser. “Newsom Breaks with Socialists over Billionaire Tax, and California Voters Appear Poised to Reject It.” Fox News, 4 Nov. 2026, www.foxnews.com/politics/newsom-breaks-socialists-over-billionaire-tax-california-voters-appear-poised-reject.
[4] Baig, Yousef. “Prop. 40’s Failure Points to the Tax California Already Pays for Its Wealth: Politics Overrun by Money.” CalMatters, 4 Nov. 2026, calmatters.org/commentary/2026/11/billionaire-tax-failure-money-politics/.
[5] McCarthy, Will, et al. “What the Voter Records of California’s Billionaires Reveal.” Politico, 2 Nov. 2026, www.politico.com/news/2026/11/02/what-the-voter-records-of-californias-billionaires-reveal-01144064.