Proposition 40 would impose a single 5% tax on the net worth of California’s roughly 250 billionaires, whose combined fortunes exceed $2 trillion, generating an estimated $100 billion for health care, food assistance and education, according to supporters.
The proposal, drafted by University of California, Berkeley economist Emmanuel Saez – a leading scholar on wealth inequality – frames the tax as a straightforward way to fund health‑care programs, arguing that the state’s universities, research infrastructure and talent pool would deter most billionaires from leaving.
Opponents, including Google co‑founder Sergey Brin, have poured more than $100 million into a campaign to defeat the measure, warning that the tax could drive wealthy residents out of California and harm the state’s economy.
Governor Gavin Newsom, who is widely expected to run for president in 2028, also opposes Proposition 40, preferring a federal wealth tax instead of a state‑level levy.
Polling shows a mixed picture: a UC‑Berkeley IGS poll in August found 48% of likely voters supporting the initiative versus 41% opposed, while a September Public Policy Institute of California poll put support at 52% to 46%. A Reuters/Ipsos nationwide poll in August reported 64% of independent voters favoring higher taxes on corporations and billionaires.
Historically, California’s direct‑democracy system has been hostile to tax‑raising measures; only one in three citizen initiatives ever passes, and a 2022 effort to raise taxes on high earners (Proposition 30) was rejected 58% to 42% despite a Democratic‑leaning electorate.
Critics of the billionaire tax point to experiences in Europe, where wealth taxes were repealed between 1997 and 2018 amid concerns about capital flight and competitiveness, and they estimate the likely revenue at closer to $40 billion rather than the $100 billion projected by proponents.
If approved, the tax would be retroactive to Jan. 1, limiting the ability of billionaires to avoid it by moving out of state, though analysts say the impact on Silicon Valley’s tech ecosystem would be minimal.