California will not become the first state to impose a tax on billionaires’ net worth—at least for now. Voters rejected Proposition 40, a one-time 5% levy on California residents and trusts holding more than $1 billion in assets, with the Associated Press calling the race for opponents. The final margin stood at roughly 52.8% against and 47.2% in favor. California’s proposed billionaire tax has failed at the ballot box.
The measure was designed to raise money largely for health care programs facing the loss of federal support. Unlike an income tax, Proposition 40 would have targeted accumulated wealth, including financial holdings and other assets—a structure supporters presented as a way to reach fortunes that can grow without producing conventional taxable income. The proposal’s defeat leaves California’s existing tax system in place and denies wealth-tax advocates their most prominent test case in the United States.
Opposition from Silicon Valley helped define the campaign. More than 70 current and former California billionaires reportedly poured a record $612 million into this year’s state elections, with nearly half directed toward efforts to stop Proposition 40. Google co-founder Sergey Brin, former Google chief executive Eric Schmidt, venture capitalist John Doerr, Stripe CEO Patrick Collison, and crypto executive Chris Larsen were among the major donors identified in coverage of the campaign.
The central argument against Proposition 40 was that wealthy residents could relocate, move assets, or alter their legal residency to avoid the charge—potentially costing California more in long-term tax revenue than the measure collected. Supporters countered that the state’s concentration of extreme wealth made a one-time assessment unusually lucrative and argued that the threat of departure had been overstated. Economists and founders interviewed before the vote remained divided over whether the tax would trigger a meaningful exodus or mainly reduce the fortunes of people who stayed.
The campaign also exposed a fault line among Democrats. Nationally, some progressive leaders viewed Proposition 40 as a possible model for financing public services through taxation of the ultrawealthy, while other Democrats worried about volatility, enforcement, and the practical difficulty of valuing private companies and complex holdings. That disagreement made the initiative more than a California budget fight: its result became a signal about how far voters may be willing to go when taxation shifts from annual income to total wealth.
For now, the outcome is a major win for the billionaire-backed opposition and a setback for advocates of a direct wealth tax. California’s election process can continue absorbing late-arriving mail ballots, but the race has been called because the remaining vote cannot change the result. Supporters may still return with a revised proposal, while opponents have demonstrated that defending California’s tax system can command extraordinary spending from the technology and finance worlds.
