Voters in California rejected Proposition 40, a measure that would have taxed billionaires based on their net worth and financial holdings, by 52.8% to 47.2%, according to The Associated Press. The proposal, which aimed to generate $100 billion for healthcare and education through a one-time, 5% tax on billionaires, was defeated despite support from the California Democratic Party and California Federation of Labor Unions.
Leaders for Service Employees International Union-United Healthcare Workers West, the union pushing the measure, seemed to concede the race minutes before the polls closed but vowed to try again in 2028 if California’s Legislature “fails to deliver a real solution” to fund healthcare. Dave Regan, president of SEIU-UHW, said, “That’s not a hypothetical. That’s our plan.”
Opponents of the measure, including campaign strategist Evan Westrop, argued the proposal would harm the state’s economy and drive billionaires out of the state. They claimed the measure had already driven billionaires from the state and permanently harmed income tax revenue. The opposition campaign, backed by wealthy tech investors and healthcare organizations, said the state still faces “enormous pressure” to find other ways to fund healthcare hit by federal cuts.
Proposition 40 revealed divisions among Democrats, with Gov. Gavin Newsom and other allies opposing the measure. Newsom endorsed the billionaire-backed counter measure, Prop. 42, designed to ban all wealth taxes in California and kill Prop. 40. Newsom and Democratic allies argued a one-time tax would not solve the state’s fiscal woes and would drive wealthy residents out of state.
Supporters of Prop. 40 blamed its loss on billionaires vastly outspending the Yes campaign, which raised $33.5 million. Billionaires poured hundreds of millions of dollars into the campaign to stop Prop. 40. Google co-founder Sergey Brin led the charge, publicly moving out of state and donating $102 million to Building a Better California, a political committee he founded to oppose the tax.
