California Voters Appear to Reject Billionaire Tax, Setting 2028 Fight

California’s Proposition 40, a one-time 5% tax on state billionaires, appears headed toward defeat after opponents spent more than $300 million, Business Insider reported. Votes for Prop 40 and Prop 42 remain under count, so both outcomes remain provisional.

Prop 42 appears headed toward passage and would restrict future California efforts to tax financial assets, according to Business Insider. Mike Solana of Peter Thiel’s Founders Fund wrote on X: “Eat shit, communists.”

Business Insider said the result left Silicon Valley’s recent flirtations with MAGA and extravagant spending looking like political liabilities. The outlet described California as the country’s most progressive state, with the highest wealth inequality.

It called the choices either a failure of populism or a victory of free enterprise. The outlet also placed the vote in the bluest national election in recent history.

What does the $2.3 trillion wealth pool mean?

More than 200 billionaires live in California, Business Insider reported, and together they hold an estimated $2.3 trillion. UC Berkeley economist Gabriel Zucman said that sum roughly equaled the combined annual income of every single resident in the state.

California could soon gain dozens more billionaires as Anthropic and OpenAI prepare what Business Insider called “world-historic IPOs.” Anthropic’s IPO alone could mint close to 1,000 centimillionaires, according to the outlet.

Business Insider reported that most fortunes in tech remain in company equity, which goes untaxed until shares are sold. That structure has allowed some of California’s richest people to pay little income tax. Mark Zuckerberg, Larry Ellison and Larry Page famously take $1 salaries, the outlet reported.

Tom Steyer, an investor and former gubernatorial candidate, said: “The way this system works is they can literally create gigantic fortunes without paying tax.” He added: “We know where we need to go, which is a fairer tax system.”

Would a 5% tax stop founders from building in California?

Prop 40 supporters argued that the measure would correct a long-standing unfairness while still allowing billionaires to remain very rich. Saikat Chakrabarti, a former Stripe engineer and political adviser, wrote on X: “The poorest billionaire in California will make about $300 million this year. If we pass the CA wealth tax, he will only make $235 million.”

Opponents told Business Insider that requiring cash for paper wealth would damage the tech economy, force founders to sell stakes in private companies and inspire an exodus from California. Earlier this year, investor Balaji Srinivasan wrote on X that Larry Page, Sergey Brin, Elon Musk and Peter Thiel had already “exited the failed state of California.”

Y Combinator CEO Garry Tan warned that many startup founders would choose not to come to California if the tax passed. Steyer, one of the few billionaires who supported Prop 40, countered the claims about forced sales and an exodus.

Steyer rejected the argument that a failed ballot measure ruled out every possible tax design. He said: “If prop 40 is ‘not the way to skin the cat, don’t come back and tell me there’s no way to skin the cat.’”

How did $300 million change the campaign?

Business Insider reported that opponents organized a coalition including Sergey Brin, Patrick Collison, Eric Schmidt and John Doerr. Together, they spent more than $300 million to defeat Prop 40. The Washington Post reported that the effort included a $148 million ad campaign.

Business Insider called the coalition’s total the most ever spent by one side on a single ballot initiative. Supporters spent about $2 million on ads, according to the outlet. Cooper Teboe, a political strategist in Silicon Valley, said: “The disparity in money in this thing was too high.”

Teboe added: “There was a genuine marketing gap.” Money was not everything, Business Insider concluded. In Texas, Elon Musk, described by the outlet as sometimes a trillionaire, spent nearly $500 million trying to keep Republicans in office.

Voters nevertheless elected a Democratic governor for the first time since 1991, Business Insider reported, and also elected a Democratic senator who made reining in data centers a major part of his message. The outlet said both campaigns were modeled on “top versus bottom,” rather than “left versus right,” politics, which put class interests above all else.

Is wealth taxation moving to the national stage?

Business Insider cited the intense interest on both sides and the 46% of California voters who favored Prop 40 despite flaws many identified as signs that the wealth-tax debate is only beginning. A national survey from last year showed that most Americans think billionaires do not pay enough in taxes, according to the outlet.

One study found that 73% would favor a “special additional tax on billionaires.” An April Pew survey found that 60% of people believed corporations and very wealthy people did not pay “their fair share” in taxes.

Business Insider reported that some wealth-tax proponents shifted their focus to national politics. Some Prop 40 detractors, including California Governor Gavin Newsom, argued they would rather tax wealth federally than at the state level.

Other opponents backed wealth taxes in general because they had grievances over Prop 40’s fiscal impact, how California would assess wealth and where the hypothetical revenue would go. Steyer supports a federal billionaire tax.

Cooper Teboe said a plan for taxing the ultra-rich “becomes almost a prerequisite for whoever ends up as the dominant 2028 candidate.” He added: “The war continues.”

What does this change for founders and investors?

For California founders and investors, the reported outcome removes the immediate threat of a one-time 5% charge on unrealized wealth, subject to final vote counts. Prop 42, if confirmed, would further constrain California’s options. The strategic pressure shifts toward Washington, where Newsom and Steyer favor federal wealth taxation.

Teboe’s 2028 warning supplies the practical watchpoint: the state levy appears beaten for now, but federal wealth-tax design will shape the next national campaign. The next test is which federal wealth-tax proposal, if any, survives the 2028 race.