California's Billionaire Tax Trails in Early Returns After $300 Million Opposition Drive

Initial returns published by the San Francisco Standard at 8:49 p.m. local time showed Proposition 40 losing by 56.5 per cent to 43.5 per cent. KPBS, citing the Associated Press, reported that the measure was trailing with 57 per cent of voters opposed when about 35 per cent of votes had been counted. Gulf News said that with roughly 49 per cent of votes counted as of 09:45 UAE time on November 4, the result was leaning towards a no. The outcome had not been called.

What the Measure Would Do

If approved, Proposition 40 would levy a one-time tax of 5 per cent on the worldwide net worth of California taxpayers and trusts holding more than $1 billion, according to Gulf News. It would apply to anyone who was a resident of the state on January 1, 2026, with wealth measured on December 31, 2026. Real estate held directly would be excluded, and taxpayers could pay in a single lump sum or in instalments over five years. Gulf News said the tax would reach roughly 200 billionaires, with revenue placed in a dedicated reserve and used for state healthcare, food assistance and public education programmes. The measure needs a simple majority.

The initiative was proposed by the SEIU-United Healthcare Workers West union, which projected it would raise about $100 billion, largely to offset federal healthcare cuts. California's Legislative Analyst's Office put the figure at "tens of billions of dollars" over several years, according to KPBS. A Stanford Hoover Institution study cited by the San Francisco Standard estimated about $30 billion in collections and $39 billion in lost income-tax revenue over time as wealthy residents leave.

Two Rival Measures

The result is complicated by two competing propositions. Gulf News reported that if either Proposition 41 or Proposition 42 receives more votes than Proposition 40, the billionaire tax is nullified. Proposition 42, which would bar new state taxes on personal property and which Gulf News said is backed by Governor Gavin Newsom, was leading with about 55 per cent support in early returns. Proposition 41, aimed at new taxes that sidestep the state spending cap, was trailing with about 52 per cent of voters against it.

Tech Money on the Opposing Side

The fight drew heavy spending from Silicon Valley. KPBS reported that billionaire opponents and business interests put $316.7 million into defeating Proposition 40 and promoting the two rival measures, including $102 million from Google co-founder Sergey Brin to Building a Better California, a committee he founded to oppose the tax.

Newsom, a Democrat, opposed the measure while saying he supports a federal billionaire tax. "Wealth is movable, and it shops for the state with the lowest taxes," he said, according to the San Francisco Standard. The California Taxpayers Association, the California Teachers Association and the California Medical Association also opposed it. Supporters included Senator Bernie Sanders, the California Democratic Party, the California Labor Federation and the Teamsters. SEIU-UHW president Dave Regan described it as "a one-time emergency tax, so millions of people don't lose healthcare."

Why It Matters

California is home to many of the founders and early investors behind the largest technology and AI companies, whose fortunes are held largely in company shares. A wealth tax on that scale would have been the first of its kind in a US state, and its supporters and opponents both treated the vote as a test of whether such levies can survive at the ballot box. How the state would value billionaires' assets also remained unclear, Gulf News noted. Final results may take days, as California continues counting mailed ballots.