California Voters Decide on One-Time 5% Billionaire Wealth Tax Under Proposition 40

Millions of voters across the United States on Tuesday are weighing in on state ballot initiatives concerning issues as disparate as reproductive rights and voter access. The initiative that has garnered the most attention may be California's Proposition 40, a proposed billionaire tax.

If the proposition passes, the state would levy a one-time, 5% tax on the wealth of California taxpayers and trusts with assets valued over $1 billion. The revenue would be used to pay for state healthcare programs, food assistance programs and public education.

Prop 40 is a ballot initiative put before California voters on Tuesday, meaning results will be available on or after Election Day. A simple majority vote is necessary for the proposition to succeed.

The measure would affect roughly 200 billionaires in California, according to the state's voter guide, with the revenue intended primarily to offset healthcare cuts enacted in President Donald Trump's signature tax legislation. The Legislative Analyst's Office, the California legislature's nonpartisan fiscal and policy advisor, estimates the tax would generate tens of billions of dollars in revenue.

Supporters of the measure say a one-time tax on billionaires would enlist the state's wealthiest individuals in helping ease the cost burden faced by some of California's public assistance programs. Those programs have suffered recent cuts at the federal and state level. Such fiscal support has gained added urgency as low- and middle-income residents weather affordability woes that stem in part from a rise in the costs of healthcare and other essentials, proponents say.

Critics of the measure, by contrast, say it will result in a wave of billionaires leaving the state. If such an exodus were to happen, the state's tax revenue could end up lower in the long term, undermining the short-term benefit of the proceeds from the tax, they say. As a first-of-its-kind wealth tax, the measure also risks uncertain consequences, such as legal challenges, some opponents note.

The proposition has divided prominent political officials and billionaires alike. Progressive Sen. Bernie Sanders and Rep. Ro Khanna stand among a number of elected officials advocating for the measure. "Prop 40 is the most important ballot initiative in America," Khanna said last month in a post on X.

Democratic Gov. Gavin Newsom has become the measure's most prominent opponent, arguing that the tax could be dodged by billionaires who could leave the state. Newsom has shared a counterproposal: a national billionaire tax focused on loans taken against assets. In a statement to ABC News last month, a spokesperson for Newsom said the governor supports a national tax on billionaires and is proud to stand with teachers, firefighters, reproductive health clinics and others in opposing this poorly written state measure.

Yes on 40, the main group backing the measure, has received more than $30 million, the vast majority from Service Employees International Union-United Healthcare Workers West (SEIU-UHW) and affiliated organizations. Billionaires have also been opening their wallets to fight the measure. Building a Better California, the flagship organization fighting Prop 40, has raised hundreds of millions of dollars, mostly from billionaires, according to public financial records. Top contributors include Google co-founder Sergey Brin and venture capitalist John Doerr.

Some tech billionaires in California have voiced openness to the measure, including Nvidia CEO Jensen Huang. Asked by Bloomberg Television whether he was concerned about the proposed tax, Huang said he had not even thought about it once, that they chose to live in Silicon Valley, and that whatever taxes they would like to apply, he is perfectly fine with it.