California Rejects Prop 40: Billionaires Keep Their 5% Off the Hook

Californians voted down Proposition 40 on Monday, rejecting a one-time 5% tax on residents with assets over $1 billion — and clearing the state's 200-plus billionaires of a bill supporters said would have topped $100 billion.

The measure would have applied to 214 people who lived in California as of January 1, 2026, according to Forbes data compiled by Americans for Tax Fairness, a group that advocates for higher taxes. The tax would have come due in 2027, with an option to spread payments across five years at a higher cost.

The vote ended an expensive, high-profile showdown with Silicon Valley. Opposition committees reported about $130 million in contributions through October 22, per state campaign-finance filings — roughly four times the $33 million raised by supporters.

Google cofounder Sergey Brin alone donated more than $100 million to the opposition, per CalMatters. He was joined by former Google CEO Eric Schmidt, Affirm CEO Max Levchin, Stripe CEO Patrick Collison, DoorDash CEO Tony Xu, Kleiner Perkins Chairman John Doerr, and angel investor Chris Larsen, who collectively poured millions into the "No" campaign.

The bottom line: the best-funded side won, and by a wide margin on the money.

How did tech executives prepare for the tax?

Some billionaires didn't wait for the vote. Brin and fellow Google cofounder Larry Page moved entities tied to them out of California in December, as Business Insider first reported.

Meta CEO Mark Zuckerberg weighed moving out of the state. In October, Meta announced a new class of shares that would give Zuckerberg $20 billion in "immediate liquidity" — potentially allowing him to pay the tax without giving up any of his voting power.

Nvidia CEO Jensen Huang took the opposite stance. "I've got to tell you, I have not even thought about it once," Huang said during a January appearance on Bloomberg TV. "We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it. I'm perfectly fine with it."

The measure also scrambled familiar political lines. Vermont Sen. Bernie Sanders backed the billionaire tax, while California's own Democratic governor, Gavin Newsom, opposed it.

Even a "Yes" vote might not have been enough on its own.

Could Prop 40 have been blocked anyway?

Yes. Two companion measures, Props. 41 and 42, were designed to undercut Prop 40 by imposing new restrictions on state taxes. Even if voters had approved the billionaire tax, it could still have been blocked if either of those measures had received a higher number of "Yes" votes.

In plain terms: Prop 40 faced two ways to die at the ballot, and it found the first one.

What was actually at stake?

Under the measure, taxable wealth would have included ownership stakes in businesses, securities, investment accounts, art, collectibles, and intellectual property. Real estate, pensions, and retirement accounts would generally have been excluded.

Supporters pitched the tax as a way to backfill looming federal cuts to Medi-Cal, with a majority of proceeds earmarked for healthcare, plus education, food assistance, and the cost of running the tax program itself.

The economic case was contested. A National Bureau of Economic Research working paper from Stanford economists, published in October, estimated the initial tax event would bring in around $30 billion — not $100 billion. But the paper warned that prompting high-earning executives to leave the state could produce a net loss of $38.9 billion.

So the defeat settles the question for this cycle — and the NBER's exit math suggests the fight over taxing California's billionaires may now shift from the ballot box to the moving truck.