California Voters Reject Prop 40 Billionaire Tax Measure

By Olivia Hart

U.S. media projected that California voters had defeated Prop 40, a billionaire tax that supporters estimated would raise $100 billion. The figure was a supporter estimate rather than money collected, because the measure did not take effect.

What did Prop 40 tax?

Prop 40 would have imposed a tax on stocks, bonds and business assets rather than earned income. Most of the projected proceeds would have funded healthcare programs intended to offset federal funding cuts.

Those cuts were designed to pay for tax breaks enacted last year under President Donald Trump's “One Big Beautiful Bill.” The tax breaks largely benefited wealthy individuals and corporate interests, and the bill passed with Republican-only support in the U.S. Senate.

U.S. Senator Bernie Sanders and other progressives championed Prop 40 as an antidote to economic inequality and a model for other states. Its defeat marks a blow to the Democratic Party's left wing, even after Democrats won decisive majorities in both houses of Congress in a midterm election rebuking Trump and his policies.

The result exposed a gap between Democratic majorities in Congress and voter support for a specific asset tax. A party can control both chambers and still fail to win approval for a major tax.

Why did Newsom's opposition matter?

Supporters reasoned that Prop 40 had a healthy chance of passage because California's voter rolls favor Democrats over Republicans by nearly two-to-one. California Governor Gavin Newsom, a likely candidate for the Democratic presidential nomination in 2028, opposed the measure.

Newsom argued the tax would backfire in the long run by creating an unwelcome climate for upwardly mobile high-tech entrepreneurs. His opposition and division among party leaders led initial support for the measure to wane ahead of the vote.

Opponents also argued the tax would prompt the ultrawealthy to leave California, taking income-tax payments and job-producing enterprises with them. They said it would discourage entrepreneurs from building startups in the state, but no cited evidence showed either outcome had occurred.

The timing did not help proponents. Higher gas prices and affordability concerns had put much of the country in a sour economic mood, and the opponents' warnings may have resonated. The practical result was that a Democratic-leaning electorate still rejected the proposal.

Who financed the opposition campaign?

Labor unions were divided over Prop 40, even as billionaire donors funded a large opposition campaign. Google co-founder Sergey Brin and at least 11 other billionaires contributed a collective $269 million to Building a Better California, a political action committee.

The committee spent more than $300 million on campaigns opposing Prop 40. That exceeded the reported $269 million contributed by Brin and at least 11 other billionaires. The available account did not identify whether additional donors or other committee money covered the difference.

Ads supported by the effort framed Prop 40 as a gateway to more aggressive taxation for all Californians and as a threat to retirement accounts. Those were campaign claims; no cited evidence showed effects on retirement savings or future tax policy. In practical terms, the opposition combined concentrated donor money with economic fears.

Can Democrats revive the push?

Incoming Senate Finance Committee Chairman Ron Wyden signaled that taxing the ultrawealthy remains a central goal for the Democratic Party. In a November 4 statement outlining the panel's priorities, he said: “The committee will redouble its efforts to ensure billionaires pay their fair share and hold tax cheats accountable.”

His comments came after Prop 40's defeat, and they did not include a federal bill or timetable for another attempt. The California vote nevertheless left the national push unresolved. The next test is whether Democrats can turn support for taxing billionaires into a measure that survives a statewide vote.