California voters face a world-first billionaire wealth tax — and a $200M campaign to stop it

On November 3, 2026, California voters will decide whether to impose what would be the first state-level wealth tax on billionaires anywhere in the world — a one-time 5% levy on the net worth of roughly 200 residents worth $1 billion or more. The campaign to stop it has already raised more than $205 million, the governor is publicly opposed, and polls show the race too close to call.

Under Prop. 40, the state would be required to assess and levy taxes on a broad array of assets — including stocks, investment accounts, business interests, art collections, wine vaults, cars, and other wealth-holding property — owned by people who were California residents as of January 1, 2026. Ninety percent of the revenue would flow to state-funded healthcare programs including Medi-Cal, with the remainder split between food assistance and public education.

The labor union SEIU United Healthcare Workers West sponsored the initiative, which was drafted by tax law professors Brian Galle of UC Berkeley, David Gamage of the University of Missouri, and Darien Shanske of UC Davis, together with UC Berkeley economist Emmanuel Saez. It qualified for the ballot in June after SEIU-UHW submitted 1.6 million signatures — nearly double the 874,641 required — of which 980,438 were certified as valid by the California secretary of state.

Before the June 25 withdrawal deadline, SEIU-UHW offered to pull the 5% proposal if Governor Gavin Newsom backed a smaller 2% legislative levy instead. Newsom quickly rejected the offer. After talks broke down, the initiative earned a spot on the November ballot. Newsom has since endorsed two counter-measures — Propositions 41 and 42 — that could nullify Prop. 40 or ban future wealth taxes outright, according to CalMatters.

The opposition has been lavishly funded. Google co-founder Sergey Brin alone has poured $102 million into the campaign against the measure, including backing for the two counter-propositions, according to CalMatters. He is also among a small group of billionaires who have moved residences or business assets out of California in an attempt to avoid the tax. According to Wikipedia, seven of California's estimated 214 billionaires are reported to have left the state before or around the January 1, 2026 eligibility cutoff, a group that includes PayPal co-founder Peter Thiel, former Uber CEO Travis Kalanick, and Google co-founders Larry Page and Sergey Brin. Billionaires who relocated could still be subject to residency audits examining whether their break from California was complete enough to exempt them from the tax.

How much money the tax would actually raise is fiercely contested. SEIU-UHW estimates $100 billion in total revenue, but that figure includes an estimated $29 billion attributable to billionaires who have reportedly already left the state, according to Fortune as cited by Wikipedia. According to the California Legislative Analyst's Office, the tax would likely produce a temporary boost in revenue amounting to up to tens of billions of dollars gathered across several years, while annual income tax receipts could dip by less than $1 billion as a result of billionaires leaving the state.

Even if all of them left the state, it would take 25 years for the loss of their tax payments... to surpass the amount the state would raise.— Emmanuel Saez and Gabriel Zucman, initiative co-authors

Critics are less sanguine. In October 2026, Stanford researchers Benjamin Jaros and Joshua Rauh ran 100,000 simulations of possible outcomes and estimated the tax would cost California $39 billion in net revenue, with 85 percent of simulated scenarios showing a net negative impact. The conservative-leaning Hoover Institution estimated the net effect could be negative by almost $25 billion. According to Wikipedia, UC Berkeley economics professor Enrico Moretti warned that the tax "has the potential to completely destroy California's economy" and described the revenue estimate as "way overly optimistic."

The union is not accounting for the different ways that people can move or reclassify wealth.— Kent Smetters, academic

Proponents counter that fears of mass billionaire flight are overstated. Citing a 2022 Massachusetts 4% surtax on income above $1 million that brought in more than projected, Economic Policy Institute economist Teresa Ghilarducci argued the concern was overblown. According to Wikipedia, asset management company Nuveen took the view that large-scale billionaire departures were improbable and that the tax carried little risk for California's credit standing or municipal bonds.

Even if voters approve the measure, implementing it would be a significant undertaking. California does not currently tax personal wealth beyond local levies on real estate and some business equipment, and the state's Franchise Tax Board has no existing mechanism to appraise the full range of assets the tax would cover. The board would need to build that capacity within six months of the measure passing, according to CalMatters.

It can be done. But it's going to take a huge investment of resources to actually pull it off.— Kirk Stark, UCLA tax law professor

There are commonsense methods like looking at comparable assets or looking to available markets to see how comps are valued. We wouldn't be asking people to reinvent the wheel here.— Ariel Jurow Kleiman, tax policy professor, University of Southern California

Disputes over the valuation of privately held businesses are widely anticipated by experts. The Tax Foundation, a center-right think tank, has argued that certain provisions tied to dual-class share structures could push the effective rate well above 5% for some taxpayers, though it noted such an outcome would be unlikely in cases where valuations are clearly wrong. The initiative's drafters disputed that characterization. Litigation is widely anticipated regardless of the outcome.

With polls showing the race at roughly 46% yes versus 43% no in one October survey, and prediction markets leaning toward defeat, the vote on November 3 is genuinely uncertain. What is certain is that the result will set a precedent — either as the first enacted billionaire wealth tax of its kind, or as a signal about the limits of progressive taxation even in the country's most Democratic state.

Why it matters — If passed, Prop. 40 would be the first enacted billionaire wealth tax in the United States and a potential model — or cautionary tale — for other states and countries debating how to tax extreme wealth.

Sources differ on Net revenue impact of Prop. 40: $100 billion in total revenue (SEIU-UHW (via en.wikipedia.org)) vs Up to tens of billions temporarily; income tax losses under $1 billion/year (California Legislative Analyst's Office (via en.wikipedia.org)) vs Net negative by almost $25 billion (Hoover Institution (via en.wikipedia.org)) vs Net cost of $39 billion; 85% of scenarios show net negative (Stanford researchers Jaros and Rauh (via en.wikipedia.org))

Reported by calmatters.org, en.wikipedia.org, desertsun.com