The proposed ballot initiative introduces a one-time, five percent retroactive tax on billionaire net worth, with proceeds earmarked to offset federal Medicaid reductions for lower-income residents. Researchers remain sharply divided, with one estimate projecting roughly $100 billion in revenue while an opposing study predicts an exodus costing the state $39 billion. Meanwhile, opponents have poured $333 million into defeating the initiative even as the total wealth of California's billionaire class surged to $2.3 trillion by mid-2026.
Key points
Most revenues from the proposed tax are designated to fund healthcare for low-income resi…: Most revenues from the proposed tax are designated to fund healthcare for low-income residents facing federal Medicaid cuts.
Economist Gabriel Zucman estimates the proposal could raise approximately $100 billion to…: Economist Gabriel Zucman estimates the proposal could raise approximately $100 billion to combat inequality and inspire wider policy.
Stanford economist Joshua Rauh projects the measure could trigger a wealthy exodus that u…: Stanford economist Joshua Rauh projects the measure could trigger a wealthy exodus that ultimately costs California $39 billion.
Sources checked by our analysis pipeline: 1
In 1978, California voters approved Proposition 13, a historic tax revolt that became an opening salvo in the Reagan revolution and its national movement to slash taxes. Now, Californians are voting on Proposition 40, which could prove to be just as revolutionary — but in the opposite direction: it would create America's first-ever wealth tax targeted at billionaires.
As Election Day approaches, economists have been duking it out over this proposed wealth tax. It could provide a sort of nerdy preview of a coming national fight over taxing the superrich. Will this wealth tax help rein in runaway inequality and fill the state's coffers — or will it convince billionaires to fire up their private jets and set up residence in mansions outside the state? Some megabillionaires have already fled California since the tax was proposed.
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