Proposition 40 asks California voters to enact the world's first billionaire tax, directing roughly $100 billion largely toward healthcare services impacted by a 2025 federal tax law. Critics warn the policy could drive out top earners and undermine the state's innovation sector, but backers counter that only six billionaires moved ahead of a January 1, 2026 avoidance deadline. Supporters also note that between 2019 and 2025, these individuals paid only 0.26% of their wealth in state income taxes while their fortunes grew by an average of 15% annually. Six Nobel Prize-winning economists project the measure could trigger the adoption of similar wealth taxes globally.
Key points
Most of the projected $100 billion in proceeds is earmarked to shield California's health…: Most of the projected $100 billion in proceeds is earmarked to shield California's healthcare system from federal funding cuts.
Advocates argue previous wealth taxes in Massachusetts and Washington did not diminish th…: Advocates argue previous wealth taxes in Massachusetts and Washington did not diminish their respective high-earning resident populations.
Six Nobel Prize-winning economists anticipate the California measure could catalyze simil…: Six Nobel Prize-winning economists anticipate the California measure could catalyze similar billionaire tax initiatives across the globe.
Sources checked by our analysis pipeline: 1
On Tuesday, California voters will decide whether to enact Proposition 40, a one-time, 5% tax on the net worth of about 250 California billionaires.
In recent months, a number of California billionaires and their apologists in the media and in government have come out swinging against the ballot measure. I’m not a billionaire, but I’m a Californian wealthy enough to know that they have no valid reason to fight the proposition. For multimillionaires like me, paying a 5% tax would not change our lives materially, and if we can afford this as people well below the billionaire line, certainly those at the very top can too.
Prop 40 would enact the first tax on billionaires anywhere in the world, with organizers estimating it would raise roughly $100bn in revenue, most of which would be directed to healthcare to make up for federal cuts from Trump and Republicans’ 2025 tax bill. Six Nobel Prize-winning economists said it would “kickstart a movement to tax ultra-high-net-worth individuals in other states – and eventually at the federal level and in other countries”.
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