Your guide to Proposition 40: California’s billionaire tax proposal

Labor unions, tech executives and politicians have been sparring over a high-profile ballot measure to tax the assets of California billionaires to mostly fund healthcare.

Now voters will get a chance to weigh in.

The high-stakes battle over the 2026 Billionaire Tax Act has fueled a debate over whether the state’s ultrawealthy are paying their fair share in taxes. As the cost of living in the Golden State rises, the divide between the megarich and poor has become a more prominent political flash point. The proposed wealth tax also has divided labor unions and Democrats, some who fear that California entrepreneurs and businesses will flee the state.

More than $200 million already has been spent on supporting and opposing Proposition 40, data from the California secretary of state show. The total includes money raised to support two measures that could nullify the billionaire tax proposal.

California

Voter guide to the 2026 California general election

California’s general election takes place on Novemer 3. Learn about L.A.’s city and county races as well races for state office.

Oct. 1, 2026

Proposition 40 would impose a one-time 5% tax on billionaires’ assets. The tax applies to people with a net worth of at least $1 billion who resided in California on Jan. 1.

Ninety percent of the tax would fund healthcare and 10% would go toward education and food assistance.

The tax would impact hundreds of billionaires whose net worth includes assets such as their businesses, stocks and other investments. Real property, pensions and retirement accounts generally would be excluded.

California probably would collect tens of billions of dollars from the wealth tax, but it’s also tough to predict exactly how much, according to an analysis from the Legislative Analyst’s Office. The wealth of billionaires is tied heavily to stock prices that fluctuate, and they might take actions to reduce their taxes, the analysis said.

Fundraising data will be updated regularly until the election.

The Service Employees International Union-United Healthcare Workers West, politicians such as U.S. Sen. Bernie Sanders (I-Vt.), the California Democratic Party, the California Federation of Labor Unions AFL-CIO and others back the billionaire tax.

Supporters estimate the tax would raise about $100 billion that would offset federal funding cuts. The tax, they say, would help keep healthcare affordable as well as “local hospitals and ERs open, fund food aid, and support K-14 public education.”

“Billionaires amassed their extreme wealth on the backs of the middle class, and we have a chance to make them pay their fair share so WE aren’t stuck paying more for healthcare,” arguments in favor of the proposal say.

Supporters say the idea that billionaires are fleeing the state to escape the tax is a “myth,” noting that the majority continue to live in California.

More than $32 million has been contributed to support Proposition 40, with the majority coming from the SEIU, according to data from the California secretary of state.

Business groups such as the California Chamber of Commerce, the California Teachers Assn. and Planned Parenthood Affiliates of California oppose the proposal.

Gov. Gavin Newsom and Democrat Xavier Becerra and Republican Steve Hilton, who are running to replace Newsom, also have spoken out against it.

Opponents describe the wealth tax as a “flawed experiment” that will harm California’s economy because companies and rich people will flee the state.

“If they leave, it will create a huge hole in our budget, threatening core services like education, healthcare and public safety,” arguments against the proposition say.

Opponents of the measure say the proposal is an ineffective attempt to address the long-term effects of the healthcare cuts and would harm California’s economy and budget.

The state budget in California already is largely dependent on income taxes paid by its highest earners. Because of that, revenues are prone to volatility, hinging on capital gains from investments, bonuses to executives and windfalls from new stock offerings, and are notoriously difficult for the state to predict.

Billionaires such as Palmer Luckey, the co-founder of defense tech startup Anduril Industries, and entrepreneur Mark Cuban have pushed back against the proposal on social media. Some tech executives have been relocating or moving their assets to try to avoid the potential tax. Google co-founder Sergey Brin has been cutting ties to California, relocating to Nevada while funding groups such as Building a Better California that are backing ballot measures that could nullify the billionaire tax.

More than $187 million has been spent opposing the proposition, with the bulk coming from Building a Better California, cryptocurrency company Ripple Labs and its co-founder Chris Larsen, data from the secretary of state show.

Supporters say it would offset federal funding cuts to Medi-Cal, the state’s health insurance program for low-income residents, food assistance and public education.

Through loopholes and tax breaks, billionaires have avoided paying more in taxes and should pay their “fair share,” supporters say.