Prop. 40: Will California voters approve the billionaire tax?

California voters will decide in November whether to pass Proposition 40, the so-called California Billionaire Tax Act, which would impose a one-time tax on the state's wealthiest residents.

What's Prop 40?

If Prop. 40 passes, individuals or couples whose net worth exceeds $1 billion as of Dec. 31, 2026, would owe a one-time tax equal to 5% of their wealth. The tax could be paid in five annual installments.

For example, Meta CEO Mark Zuckerberg would owe about $10 billion in tax, or 5% of his roughly $200 billion net worth.

Why supporters want Prop 40 to pass

Under the proposal, 90% of the tax revenue would go toward public health care services, while the remaining 10% could be spent on education and food assistance.

Supporters of Prop. 40 argue that because California has about 250 billionaire residents, the state could raise roughly $100 billion from the tax. They say the revenue would help offset federal funding cuts to health care and nutrition assistance.

Supporters, including Sen. Bernie Sanders and Rep. Ro Khanna, say the one-time tax is necessary to help fund Medicaid and other medical services for working-class Californians.

Why Democrats oppose Prop 40

Prop. 40 has exposed divisions within the Democratic Party. Leaders including Gov. Gavin Newsom and gubernatorial candidate Xavier Becerra oppose the measure, arguing it may provide a temporary boost in state revenue while creating negative long-term consequences.

According to the nonpartisan Legislative Analyst's Office (LAO), revenue from the billionaire tax could help the state for several years. However, some wealthy residents could leave California, reducing future state tax revenue. The office estimates the measure could eventually reduce state revenues by around $1 billion annually.

"This could mean less money for the state's General Fund, which pays for many public services, including education, health care and prisons," the LAO said in its analysis of Prop 40.

The state also would have to spend tens of millions of dollars each year to administer and enforce the tax.

Newsom has said he supports a national billionaire tax but argues a California-only wealth tax would put the state at a competitive disadvantage because wealthy residents could move elsewhere to avoid it.

Becerra has called Prop. 40 "sketchy" and argued the state needs a long-term solution to address health care funding challenges

Prop 41 and 42 to block 'billionaire tax'

Opponents of Proposition 40 qualified Props 41 and 42 for the November ballot as countermeasures to the billionaire tax, potentially preventing it from taking effect even if it passes.

"If passed, Prop 41 would nullify any new state taxes enacted after Jan. 1, 2026 that do not count toward California's spending cap."

Prop 42 seeks to ban new state taxes on personal property like stocks and artwork, excluding real estate. If passed, it would nullify any taxes enacted after Jan. 1, 2026."