California Voters Poised to Reject Proposition 40 Billionaire Wealth Tax

California's Proposition 40, a constitutional initiative that would impose a one-time wealth tax on the state's richest residents, is on track for defeat after trailing by over 11 percentage points with roughly 60% of votes counted, according to reporting by Yahoo Finance (https://finance.yahoo.com/economy/article/californias-billionaire-tax-on-track-for-defeat-as-the-state-continues-to-count-votes-190840319.html?.tsrc=rss). While election officials have not formally called the race, early tallies suggest California voters have rejected the measure amid aggressive campaigning by Silicon Valley leaders.

The referendum proposed a one-time 5% tax on California residents and trusts with assets surpassing $1 billion as of Jan. 1, 2026. The tax, which would have been payable in 2027 with an option to spread installments over five years, excluded real property, pensions, and specific retirement savings. State legislative analysts estimated the measure would affect roughly 200 billionaires, directing 90% of proceeds toward public healthcare services and the remainder to education, food assistance, and program administration.

Technology executives invested heavily to halt the initiative. Google co-founder Sergey Brin contributed a reported $102 million to a political action committee fighting Proposition 40. Meta chief executive Mark Zuckerberg separately warned his board of directors that they needed to protect him from the levy or he would publicly list his Palo Alto home for sale, according to a New York Times report cited by Yahoo Finance.

Opposition also extended to mainstream state Democrats. Outgoing California Gov. Gavin Newsom opposed the wealth tax, warning it would induce high earners to leave. Newsom pointed to an analysis by the California Legislative Analyst's Office, which estimated that while the tax would generate a temporary windfall in the tens of billions of dollars, taxpayer departures could cause an ongoing decline in regular state income tax revenues of less than $1 billion annually.

Voters also favored Proposition 42, an initiative backed by wealth tax opponents that bars state taxes on personal savings, assets, and retirement accounts. If passed with more affirmative votes than Proposition 40, legal mechanisms were designed to block the billionaire tax from enactment regardless of its outcome.

Prominent progressive backers, including Sen. Bernie Sanders and Rep. Ro Khanna, framed the initiative as a benchmark in addressing income disparity. Following the early returns, Khanna acknowledged the measure's deficit but stated that organizers plan to renew their push in a subsequent election cycle while advocating for federal wealth tax legislation.