2026 California Proposition 40

Impact

The initiative would impose the Billionaire Tax Act, a one-time 5% tax on the net worth of the California residents worth over $1 billion.^[15] 90% of revenue from the tax would go towards state-funded healthcare programs,^[16] including Medi-Cal, while the rest would provide funding for food assistance and public education.^[15]

The eligibility cut-off outlined in the initiative was January 1, 2026, meaning that if the initiative is passed by voters, billionaires who continued to hold residence in the state of California after that date will be subject to the 5% tax.^[15] Six of the state's estimated 214 billionaires were reported to have left California before or around the deadline, including PayPal co-founder Peter Thiel, former Uber CEO Travis Kalanick, and Google co-founders Larry Page and Sergey Brin.^[15][17][18] They may be subject to a residency audit to determine whether they have sufficiently severed ties with the state.^[19]

Support

U.S. senator Bernie Sanders, a democratic socialist, has endorsed the billionaire tax. At a February 2026 Los Angeles rally in support of the tax, Sanders described billionaires as "oligarchs of the 18th century...[who] believe they have the divine right to rule".^[38] Many prominent supporters have asserted that the billionaire tax is a necessary response to the Trump administration's restrictions and cuts to Medicaid,^[39] including former U.S. secretary of labor Robert Reich, who described the tax as a "practical way to keep the healthcare system functioning".^[39]

Emmanuel Saez, a co-author of the initiative, said that the tax would "preserve [healthcare and education] programs that are crucial for California's economy".^[2]

The state branch of the Democratic Socialists of America endorsed the billionaire tax, stating that "without this funding, thousands of jobs will be lost, millions of Californians could lose coverage altogether, and care facilities across the state could be forced to close".^[40][41]

U.S. representative Ro Khanna, a progressive Democrat who represents much of the Silicon Valley, has expressed strong support for the tax.^[42] Some venture capitalists from Khanna's district responded by backing his unsuccessful primary challenger, Ethan Agarwal.^[43] Two 2026 Democratic gubernatorial candidates, billionaire businessman Tom Steyer and state superintendent of public instruction Tony Thurmond, endorsed the tax.^[42][44]

Current Affairs editor Alex Scopic argued in favor of the tax, considering it an important method of countering the "buy, borrow, die" tax avoidance strategy by billionaires.^[34]

In August 2026, the California Democratic Party endorsed Proposition 40.^[45][46] After a failed initial endorsement vote and an unsuccessful alternative motion to adopt a neutral position on the measure, a second endorsement vote yielded 61.7 percent in favor, narrowly exceeding the 60 percent threshold for endorsement.^[47]

In September 2026, a group of six progressive Nobel laureates of economics published a letter in support of the tax, arguing that it would help address growing inequality in California and loopholes that have allowed billionaires to avoid taxes on capital gains.^[48][49][50] The economists wrote that if California passed Proposition 40, it would "kickstart a movement" to tax ultra-high-net-worth individuals elsewhere.^[49]

Opposition

In response to the initiative, activists staged a "pro-billionaire" protest march in San Francisco on February 7, 2026.^[55]

California governor Gavin Newsom has vocally opposed the tax, telling Politico that the proposal "makes no sense" and is "really damaging to the state".^[56] A number of Democratic candidates who aimed to succeed Newsom in the 2026 gubernatorial election also opposed the tax, including former U.S. representative Katie Porter, former U.S. secretary of health and human services Xavier Becerra, former Los Angeles mayor Antonio Villaraigosa, and San Jose mayor Matt Mahan.^[57][42] Republican candidates Chad Bianco and Steve Hilton expressed opposition to the tax.^[58]

Robertas Bakula, an associate fellow at the Ayn Rand Institute, called the tax an "immoral scam" in an opinion piece for the Los Angeles Daily News, arguing that the January 1 eligibility deadline is illegal because the United States Constitution bans retroactive laws.^[59] In a February 2026 effort to curb the effects of the eligibility deadline, U.S. representative Kevin Kiley introduced a bill in Congress that would prohibit a state from levying a tax retroactively on people who no longer live in the state.^[38]

In an April 2026 editorial, The Wall Street Journal criticized wording in the act that would allow the state legislature to make amendments that could widen the scope of eligibility for the tax.^[60] In May 2026, The Washington Post publicly opposed the "self-destructive" tax, stating that the initiative "has already cost the state more in lost future revenue from income taxes than it would raise".^[61] In September 2026, the editorial board of the Los Angeles Times urged voters to oppose Proposition 40, calling the measure "poorly drafted" and claiming that it has "insufficient guardrails to ensure the funds are spent to actually address Californians' most pressing healthcare needs".^[62] In a discussion with Madeleine Brand on KCRW, former Los Angeles Times editorials editor Mariel Garza noted that the newspaper's owner, Patrick Soon-Shiong, would be subject to the tax.^[63]

Building a Better California, an organization co-founded by Sergey Brin and Eric Schmidt that is opposed to the billionaire tax,^[64] sought to introduce three questions to the November 2026 ballot, all of which were designed to curb the effects of the billionaire tax if it passes.^[65] One would've required more audits of special taxes and impose more rules on how revenue from new taxes could be spent,^[66][38] another would bar new taxes from circumventing rules on education spending requirements for tax revenue,^[67][65] and a third would invalidate the tax by amending the state constitution to forbid retroactive taxation.^[65][68] The latter two measures—known as Proposition 41 and Proposition 42, respectively—qualified for the November ballot.^[16] By August 2026, Building a Better California had raised $118 million, with Sergey Brin contributing $102 million to the organization.^[69][70]

In June 2026, a number of progressive organizations^[71][72] and labor unions announced their opposition to the billionaire tax.^[73][74][75] In a joint statement, Planned Parenthood and the California Medical Association criticized the wealth tax's ambiguity and described it as a "flawed response" to health care cuts,^[73] while the California Teachers Association stated that the billionaire tax "will not provide the sustainable and long-lasting funding that our schools and communities deserve".^[75] That same month, several California housing advocacy groups—including California YIMBY—opposed the tax, fearing that it would discourage investment and worsen the state's housing shortage.^[76]

Other reactions

Nvidia CEO Jensen Huang, who would have to pay roughly $8 billion if the measure passed, stated he was "perfectly fine with it" and had "not thought about it once" when asked if he was concerned about the tax. He added that he and others "chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it".^[77][78] The League of Women Voters of California adopted a neutral position on Proposition 40, stating that while the measure addresses "urgent needs", its one-time structure "conflicts with sound public finance principles and risks long-term revenue loss".^[79]