California Billionaires Spent $500 Million to Kill Wealth Tax

Opponents of California's Proposition 40 spent more than $500 million to defeat the nation's first billionaire wealth tax — making it, in real dollar terms, the most expensive ballot measure ever. With 60% of the vote counted as of Wednesday afternoon, "no" votes led 55.6% to 44.4%, according to the Associated Press, which did not declare a winner. If the margin holds, the result averts a one-time 5% tax on the paper wealth of billionaires, including stock portfolios, art collections and business stakes.

The defeat capped a costly campaign that pushed some super-rich residents out of the state. A number of billionaires left California before the end of 2025 to avoid the tax. Google co-founder Sergey Brin spent over $100 million backing political action committees opposed to the measure. Meta CEO Mark Zuckerberg negotiated his most recent compensation package partly to brace for the risk that Proposition 40 would become law.

Sonoma State University professor David McCuan, who tracks spending on state and local elections, estimates total spending on Proposition 40 — for and against — will surpass $500 million and could approach $650 million. Supporters spent around $150 million. "This makes Prop. 40, in real dollar terms, the most expensive ballot measure ever, in the most expensive midterms ever," McCuan told MarketWatch. The contest ran during midterms in which the 10 largest megadonors alone spent a combined $1 billion.

Did the vote stop higher taxes on the rich?

No. By several measures, ultrarich Americans moved a step closer to higher tax bills on Wednesday than they had been a day earlier, according to experts reviewing state ballot results and the Democratic wave heading to Washington. A renewed federal push would counter the 2025 Republican tax law, which kept most income-tax rates — including the top rate — from rising. It also lands amid widening wealth inequality, according to Federal Reserve data.

"If you're a billionaire in this country, you should expect to be paying higher taxes," Abdul El-Sayed, Michigan's senator-elect, said in a Wednesday morning interview with NPR. El-Sayed belongs to the Democratic majority that will control the U.S. House and Senate in January.

State results point the same direction:

• In Washington state, a repeal effort against the 9.9% income tax on millionaires appeared short of votes, with "no" leading roughly 58% to 42%, the AP reported.
• In Colorado, voters leaned toward higher income-tax rates on households starting at $500,000, with "yes" at 50.49%, according to the Colorado secretary of state's office.
• In California, voters appeared likely to keep higher income-tax rates for the richest residents even while rejecting the one-time billionaire wealth tax.

What happens in Washington next?

The first steps toward higher taxes on the wealthiest 1% could come soon, said Henrietta Treyz, co-founder and director of economic policy at Veda Partners. Higher income taxes for billionaires, "and, perhaps a special bracket for the trillionaires among us," will likely land in a bill Democrats could assemble next year, she said. Democrats may load that bill with affordability provisions to provoke a veto from President Donald Trump — campaign fodder for the 2028 presidential election, Treyz noted.

The timing matters. In 2028 and 2029, several major tax breaks in the Republican law expire, making those years pivotal. "The billionaire tax debate at a federal level is coming, even if it fails at the state level," Treyz said.

Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, said Wednesday the committee would "redouble its efforts to ensure billionaires pay their fair share and hold tax cheats accountable."

Even in defeat, Proposition 40 changed the debate, said Andrew Lokay, a senior research analyst at Beacon Policy Advisors. "Now that it's been proposed, that takes the concept from the theoretical to a reality," he said.

How did the opponents and backers respond?

Florida Gov. Ron DeSantis warned Democrats against overreach. "They did not earn a mandate to indulge all their left-wing fantasies," he said at a Wednesday press conference. "This was not a positive view of the Democrats. This was a rejection of Republicans in Washington, and Democrats just happen to be the beneficiary." Florida voters, in a separate move backed by DeSantis, passed Amendment 3, a constitutional amendment to significantly cut local property-tax bills, despite warnings from local governments and law enforcement about service cuts.

Proposition 40's labor backers refused to concede the broader fight. "It's not enough to try once when you deal with something like this," Dave Regan, president of United Healthcare Workers West, said at a Tuesday night press conference. The measure itself was designed to replace Republican federal cuts to social safety nets such as Medicaid.

University of California, Berkeley, economist Gabriel Zucman, a longtime wealth-tax proponent, wrote on X: "Silicon Valley billionaires have won this battle. But they will lose this war. It's only a matter of time, and the Democratic wave may well accelerate this shift." The 2028 tax-break expirations will test whether that prediction holds.