California voters rejected Proposition 40's proposed one-time 5% wealth tax on assets exceeding $1 billion, leading labor sponsor SEIU-UHW West to concede defeat while eyeing a 2028 comeback. Concurrently, voters favored competing measures, including Proposition 42, which bans the state from taxing personal assets entirely. However, high-earning individuals may soon see significant federal tax increases as Democrats prepare to take unified control of Congress. Potential federal measures include proposals that would raise top marginal rates to 49% and capital gains rates to 35.8%.
Key points
California billionaires avoided an immediate wealth tax, but the sponsoring union plans t…: California billionaires avoided an immediate wealth tax, but the sponsoring union plans to pursue another ballot initiative in 2028.
High earners across the country still face potential federal rate hikes under incoming De…: High earners across the country still face potential federal rate hikes under incoming Democratic congressional control.
State-level efforts to tax high-income earners saw mixed outcomes nationwide, with a nota…: State-level efforts to tax high-income earners saw mixed outcomes nationwide, with a notable victory in Washington and an undecided race in Colorado.
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California’s ultra-wealthy tech executives appear on the verge of defeating a state wealth tax, but their tax battles are far from finished. While election officials continue counting ballots, early returns show 56% of California voters rejecting Proposition 40, compared to 44% in favour. As the ballot measure requires a simple majority to pass, election analysts say defeat is virtually assured, as per a report by CNBC. The measure sought to impose a one-time 5% levy on the net worth of California residents holding more than $1 billion in assets.
While Silicon Valley billionaires breathe a sigh of relief at home, tax experts warn that the state-level fight could catalyse a much broader push in Washington, where newly empowered Democrats in Congress are eyeing federal tax increases on top earners and a potential federal wealth tax, the report added.
Countermeasures seal Prop 40’s fate
The billionaire tax ran into direct opposition from two competing ballot measures designed as legislative countermeasures.
Proposition 41: Restricts how state tax revenue can be spent.
Proposition 42: Explicitly prohibits the state from taxing personal assets.
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