California voters to decide on Prop 40 billionaire tax

Could California become the first state in the country to enact a billionaire tax? Proposition 40 is an effort to fund the state's healthcare system - which is facing severe cuts from the One Big Beautiful Bill Act - by taxing the ultra-wealthy.

The measure would enact a one-time 5% tax on the accumulated wealth of California taxpayers who are worth more than $1 billion - about 250 people. If it passes, Prop. 40 would apply to anyone who was a legal resident of California as of Jan. 1, 2026.

Polls close at 8 p.m. Tuesday in California, after which results will start coming in.

Related story: Live election results for 2026 California propositions

Here's what you need to know about Prop 40:

What do supporters of Prop 40 say?

Supporters say it will raise $100 billion, 90% of which will restore healthcare cuts. The other 10% will go to food assistance and public education.

"Finally here in California, we're saying to them you have to put up a little bit of money, a one-time emergency tax, so millions of people don't lose healthcare. That does not make you a victim, that makes you a participant in a society that's made you incredibly wealthy," said Dave Regan, the President of SEIU United Healthcare Workers Trust.

Regan's union spearheaded Prop. 40. He says if nothing is done about the healthcare cuts, 3.5 million Californians will lose their coverage, 20 million will pay higher premiums, and some hospitals and clinics will close.

"Neither Governor Newsom nor Secretary Becerra have offered one idea to fix an imminent crisis in healthcare in California, and they all agree as to what the consequences are gonna be," said Regan.

What do people who oppose Prop 40 say?

There's a long list opposed to Prop. 40 including some of the most powerful democrats in the state - Gov. Newsom and gubernatorial candidate Xavier Becerra. Stuart Waldman, an advocate for economic growth, public policy, and Los Angeles' business community says California has a spending problem.

"Thirty-eight percent of our state budget comes from the top 1%. If those people moved, and some of them already have, it would have a drastic impact on our state budget. It would impact healthcare, it would impact teachers, it would impact, education," said Waldman.

Newsom has called for a federal wealth tax, but has criticized Prop. 40, saying it could lead to California losing its competitive edge, driving wealthy residents and businesses out of the state.

Those against Prop 40 have been critical of how it's structured, giving 90% to one category - not raising funds for public safety, housing and wildfire prevention. Some also believe it could allow future legislatures to expand taxes.