California voters reject proposed tax on billionaires’ wealth

California voters have rejected a proposal to levy a one-time wealth tax on the state’s billionaires. The measure, known as Proposition 40, was declared defeated after nearly a week of vote counting following the midterm election.

Had it passed, anyone whose wealth exceeded $1.1 billion as of 1 January 2026 would have paid a one-time 5 percent tax on their total wealth, including shares and other assets. The tax was expected to raise about $100 billion.

Supporters said the money would fund healthcare programmes. The aim was to fill the gap left by federal healthcare funding cuts resulting from President Donald Trump’s sweeping tax and spending bill. Some of the money was also earmarked for education and food assistance.

There are about 200 billionaires in California, including Meta’s Mark Zuckerberg, reality television star Kim Kardashian and media mogul Oprah Winfrey. Experts believed that, had it passed, it would have been the world’s first wealth tax targeting billionaires.

The proposal divided Democrats. The state Democratic Party, Congressman Ro Khanna and Vermont Senator Bernie Sanders campaigned in favour of it. But Democratic Governor Gavin Newsom opposed it.

Newsom worried that the tax could drive the wealthy out of the state, costing California crucial income tax revenue. Xavier Becerra, the Democratic candidate for governor, also opposed it. A leading teachers union opposed it too, because only a small share of the revenue was set aside for schools.

The measure was sponsored by the healthcare union SEIU-United Healthcare Workers West. The union argued that the Republican-controlled Congress had cut healthcare programmes to give tax breaks to the wealthy, so it was time for California’s wealthy to fill the gap.

The most active opponents were the state’s billionaires themselves. Google co-founder Sergey Brin alone contributed more than $132 million to fight the tax, according to campaign finance filings. The Los Angeles Times reported that he gave more than $100 million to a political organisation funding ballot measures that could block the tax.

All told, the opposition campaign spent nearly $425 million, making it the most expensive opposition campaign in state history. Executives from Google, Palantir, DoorDash, Stripe and Reddit were among the donors. In the first two weeks of October, spending surpassed $2.5 million a day, according to the filings.

Part of the opposition’s strategy was to place two counter-measures on the ballot, Propositions 41 and 42. Proposition 41 directly targeted the billionaire tax, while Proposition 42 was a general proposal to limit certain new taxes and would ban taxation on billionaire wealth. If either received more yes votes than Proposition 40, it would stop the billionaire tax from taking effect even if it passed.

Supporters of the billionaire tax called Propositions 41 and 42 “poison pills”. They said at least five times as much money was spent opposing the measure as supporting it.

The result could hamper nationwide momentum for taxing the ultra-wealthy. Similar proposals were being discussed in other states, and observers say California’s defeat may make that path harder.