California voters reject billionaire wealth tax, 53-47, in one of state's costliest ballot fights

California voters have rejected Proposition 40, a one-time 5% tax on the assets of residents worth more than $1 billion, with roughly 53% voting no and 47% in favor, the Associated Press projected on Monday. The defeat leaves the state without a plan to replace an estimated $100 billion in federal healthcare funding cut by President Donald Trump's 'Big Beautiful Bill' — and ends, for now, what became one of the most expensive ballot measure fights in California history.

More than $400 million was spent across three intertwined ballot measures, with more than 90% of that money going toward defeating the billionaire tax, according to fundraising disclosures filed with the California Secretary of State's office. The main opposition group, Building a Better California, raised $333.1 million since the beginning of the year. Most of that money came from billionaires.

Google co-founder Sergey Brin was the single largest donor to the opposition, contributing $102 million to Building a Better California — making 'co-founder' the occupation category that gave the most to the group overall, at $105.3 million. Donors listing their occupation as 'Investor/Philanthropist' gave $47.7 million; CEOs gave $46.6 million; and those listing 'chairman' contributed $43 million. Brin, whose largest contribution was reported from Reno, Nevada, was among the billionaires who moved out of California in response to the proposal, according to the Los Angeles Times. Fellow Google co-founder Larry Page also left the state, the Times reported.

By contrast, the main group backing the measure, Yes on 40, raised $33.1 million in total, with the bulk — $31.7 million — coming from SEIU-UHW, the Service Employees International Union-United Healthcare Workers West, which sponsored the proposition.

Opponents flooded television, radio and smartphones with ads arguing the tax was a 'reckless experiment' that would hurt all Californians, not just the ultra-wealthy, by driving high-income earners and their tax revenue out of the state. Teachers, firefighters and other middle-class Californians became the face of those campaigns, according to the Los Angeles Times. The 'no' side also argued that Proposition 40 was a one-time revenue source even though the federal healthcare cuts it was meant to address are permanent, and that it set a dangerous precedent by taxing financial assets like stocks and retirement accounts.

The measure would have affected roughly 200 of California's billionaires and directed 90% of the proceeds to healthcare services, with the remaining 10% earmarked for food assistance and education programs, according to KQED. Supporters said it would raise around $100 billion over five years.

The 'no' vote held across the vast majority of California counties, though late tallies showed significant pockets of support in Los Angeles and San Francisco — home to the lion's share of the state's billionaires. Orange County voted no by a wide margin, according to the Los Angeles Times.

The measure's defeat came even as Democrats made broader gains in the midterm elections. Gov. Gavin Newsom, the California Teachers Association and Planned Parenthood Affiliates of California were among the prominent Democrats and Democratic-aligned groups that opposed it, citing fears that billionaires would flee the state. Newsom has put forward a counterproposal: a national billionaire tax focused on loans taken against assets, according to ABC News.

He doesn't want to offend some of the billionaires who he wants to finance his campaigns, and that's the question: Are we going to be a party for the working class? Are we going to be beholden to our donors?— Rep. Ro Khanna, U.S. Representative

Khanna and Sen. Bernie Sanders were the measure's most prominent national backers, arguing it could serve as a model for a federal wealth tax. Both backed the measure in part as a potential template for their 'Make Billionaires Pay Their Fair Share Act,' a federal 5% tax on American billionaires they introduced earlier this year, according to the Los Angeles Times. Khanna and Newsom — who are both openly weighing 2028 presidential bids, according to ABC News — clashed publicly over the measure, with Khanna telling ABC News in early October that the two are 'polar opposites' on the issue.

Tech investors also pushed back hard. Vinod Khosla warned that the state's top wealth creators would leave, and Mark Cuban told Khanna he doesn't understand business, according to ABC News.

Billionaire-funded propaganda may have influenced the outcome of this election, but as hospitals reduce services, emergency rooms close and families lose access to care, the truth will become increasingly difficult to hide. Californians will see for themselves what was at stake.— Suzanne Jimenez, Chief of Staff, SEIU-UHW

Proposition 40 risked California's economic competitiveness and fiscal stability, as well as the revenue we rely on to fund our top priorities — from education and healthcare to public safety and infrastructure.— Building a Better California opposition coalition, including California Medical Association, California Primary Care Association, and California School Boards Association

The defeat does not close the debate. Leaders of SEIU-UHW vowed to put a billionaire tax proposal on the 2028 ballot if Sacramento lawmakers do not find another way to support the public health sector. Given California's volatile budget — expected to be particularly problematic next year — the Los Angeles Times reported it appears unlikely that state lawmakers will find a way to backfill the estimated $100 billion in federal healthcare funding cuts. The federal legislation backing Sanders and Khanna's national proposal will also likely face constitutional challenges if it passes, the Times noted.

Proposition 40 was one of three intertwined ballot measures on wealth taxation. Under its terms, the tax could have been nullified if Proposition 41 or Proposition 42 received more votes, according to KQED.

Why it matters — California's rejection of Prop. 40 leaves the state without a funded plan to replace roughly $100 billion in federal healthcare cuts, with hospitals and clinics already facing service reductions — and sets up a likely rematch on the 2028 ballot.

Sources differ on Whether a billionaire wealth tax would cause net revenue loss for California: Yes — billionaires will leave, reducing overall tax revenue and hurting schools and other programs (latimes.com (opposition argument)) vs No — the tax would raise ~$100 billion over five years and is the only viable way to replace federal healthcare cuts (latimes.com (supporter argument))

Reported by abcnews.com, reuters.com, kqed.org, latimes.com