2026 California billionaire tax initiative

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Proposition 40, better known as the California billionaire tax or California wealth tax, is a combined initiated constitutional amendment and state statute that will appear on the November 3, 2026, ballot in the state of California.

Quick facts
Proposition 40
November 3, 2026
One-Time Wealth Tax for State-Funded Health Care Programs Initiative
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If approved by voters, the state's billionaires would pay a one-time 5% tax on their accumulated wealth to fund health care programs, food assistance and public education. The initiative was sponsored by labor union SEIU United Healthcare Workers West (UHW).

Background

The initiative was drafted by tax law professors Brian Galle of UC Berkeley, David Gamage of the University of Missouri, Darien Shanske of UC Davis, and economist Emmanuel Saez of UC Berkeley,[1] who was inspired to work on the measure after conducting research showing that billionaires paid lower effective tax rates than middle-class workers.[2] Labor union SEIU United Healthcare Workers West (SEIU-UHW) filed the initiative. In December 2025, state attorney general Rob Bonta issued the official title and summary.[3][4]

On April 26, 2026, SEIU-UHW announced that they had collected 1.6 million signatures in support of the tax, nearly double the 874,641 required to qualify for the November ballot.[5][6] On June 17, the California secretary of state announced that the wealth tax had qualified for the ballot with 980,438 valid signatures.[7][8]

A day later, SEIU-UHW sent a letter to California governor Gavin Newsom—an opponent of the initiative—offering to withdraw the 5% wealth tax proposal if Newsom supported a smaller 2% levy on billionaires that would be passed by the state legislature;[9][10][11] Newsom quickly rejected the amended proposal.[12] Negotiations stalled before the June 25 withdrawal deadline, and the initiative was certified for the November ballot.[13][14]

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] although they are expected to experience a residency audit to determine whether they have sufficiently severed ties with the state.[19]

Revenue

Analysis by the California Legislative Analyst's Office found the wealth tax was likely to temporarily increase revenue by up to tens of billions of dollars total, collected over several years.[20][21] The analysis also found the tax would likely decrease income tax revenue by hundreds of millions of dollars or more annually due to some billionaires leaving California.[20][22]

According to the Legislative Analyst's Office projections, even if all billionaires left the state, the potential loss would represent less than 1% of California's annual income tax collections.[23][24]

SEIU-UHW, the labor union behind the initiative, estimated that the tax would generate $100 billion.[25] Revenue from the six billionaires who reportedly left the state account for an estimated $27 billion of that sum, though whether they have sufficiently severed connections to California as a matter of residency law is undetermined.[15][19] Academic Kent Smetters cast doubt on SEIU-UHW's estimate, telling the Los Angeles Times that the union is "not accounting for the different ways that people can move or reclassify wealth".[26] UC Berkeley economics professor Enrico Moretti warned that the tax "has the potential to completely destroy California's economy", and described the revenue estimate as "way overly optimistic."[2]

The conservative-leaning Hoover Institution estimated that "permanent loss of income taxes from the departing residents indicates a high likelihood that net effect of the Billionaire Tax Act will be negative" by almost $25 billion.[27] This conclusion was criticized by one of the bill's authors, David Gamage, who contended that the group's analysis "suggests that the billionaire tax might raise more revenue than our projections even say".[28]

In a guest essay for The New York Times, Gabriel Zucman and initiative co-author Saez responded to concerns about billionaires fleeing the state, claiming that because billionaires are able to avoid income tax on most earnings, "even if all of them left the state, it would take 25 years for the loss of their tax payments... to surpass the amount the state would raise" if the initiative passes.[29]

Effective tax rate

The Tax Foundation, a center-right think tank, argued that it was possible for the effective wealth tax rate to far exceed 5% for some taxpayers due to provisions related to dual-class share structures,[30] but acknowledged that this would be unlikely in cases where valuations are clearly incorrect.[31][32] The initiative's drafters published a report dismissing this concern as a misunderstanding.[31][33]

Real estate

Forbes cited the billionaire tax initiative as the reason for a real estate boom on Nevada's side of Lake Tahoe, noting that a number of lakefront homes were purchased by California billionaires after the proposal was announced.[34] Bill Dietz, a Lake Tahoe realtor, told the magazine that a "clear acceleration of ultra-high-net-worth buyers moving from California to Nevada" took place, driven by "tax strategy".[34]

In late 2025, Oracle founder Larry Ellison sold his San Francisco mansion for $45 million, choosing to relocate to Nevada; venture capitalist Steve Jurvetson later did the same.[35] In June 2026, former U.S. ambassador to Kenya Meg Whitman and her husband, neurosurgeon Griffith R. Harsh, sold a number of properties in California, including a $17.9 million fly fishing ranch, purportedly over fears that the billionaire tax would be approved by voters.[35]

Campaign

Support

Sanders discussing the billionaire tax in February 2026

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".[36] Many prominent supporters have asserted that the billionaire tax is a necessary response to the Trump administration's restrictions and cuts to Medicaid,[37] including former U.S. secretary of labor Robert Reich, who described the tax as a "practical way to keep the healthcare system functioning".[37]

Emmanuel Saez, a co-author of the initiative, said that the tax will "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".[38][39]

U.S. representative Ro Khanna, a progressive Democrat who represents much of the Silicon Valley, has expressed strong support for the tax.[40] Some venture capitalists from Khanna's district responded by backing his unsuccessful primary challenger, Ethan Agarwal.[41] Two 2026 Democratic gubernatorial candidates, billionaire businessman Tom Steyer and state superintendent of public instruction Tony Thurmond, endorsed the tax.[40][42]

Opposition

In response to the initiative, activists staged a pro-billionaire protest march in San Francisco on February 7, 2026.[43]

California governor Gavin Newsom has vocally opposed the tax, telling Politico that the proposal "makes no sense" and is "really damaging to the state".[44] 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.[45][40] Leading Republican candidates Chad Bianco and Steve Hilton expressed opposition to the tax.[46]

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.[47] 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.[36]

In an April 27 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.[48] In May 2026, the editorial board of The Washington Post publicly opposed the tax, which they described as "self-destructive".[49] The board criticized SEIU-UHW and stated that the initiative "has already cost the state more in lost future revenue from income taxes than it would raise".[49]

Building a Better California, an organization co-founded by Sergey Brin and Eric Schmidt that is opposed to the billionaire tax,[50] 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.[51] One would've required more audits of special taxes and impose more rules on how revenue from new taxes could be spent,[52][36] another would bar new taxes from circumventing rules on education spending requirements for tax revenue,[53][51] and a third would invalidate the tax by amending the state constitution to forbid retroactive taxation.[51][54] The latter two measures—known as Proposition 41 and Proposition 42, respectively—qualified for the ballot.[16] Building a Better California raised over $80 million in the first quarter of 2026, primarily from intrastate billionaires.[51][55]

In June 2026, a number of progressive organizations[56][57] and labor unions announced their opposition to the billionaire tax.[58][59][60] 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,[58] 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".[60] 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.[61]

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".[62][63]

Endorsements

Yes
Executive branch officials
U.S. senators
U.S. representatives
Statewide officials
State legislators
Local officials
Individuals
Labor unions
Organizations
No
Executive branch officials
U.S. representatives
Statewide officials
State legislators
Local officials
Individuals
Labor unions
Organizations
Political parties
Newspapers
Declined to endorse
Labor unions

Polling

More information Poll source, Date(s) administered ...
Poll source Date(s)

administered

 Sample

size[c]

 Margin of error Phrasing Yes No Undecided
Goodwin Simon Strategic Research[115][A] June 10–15, 2026 607 (LV) – – 47% 43% 10%
Tulchin Research (D)[117][B] June 8–14, 2026 1000 (LV) ±3.1% – 41% 47% 12%
Public Policy Institute of California[118] May 14–18, 2026 986 (LV) ±4.1% [i] 54% 45% 1%
Berkeley IGS[120][C] March 9–15, 2026 5109 (RV) ±2.0% [ii] 52% 33% 15%
UC Berkeley Citrin Center/Politico[122] February 25 – March 3, 2026 1220 (RV) ±3.0% [iii] 50% 28% 23%
The Mellman Group (D)[123][D] January 6–12, 2026 800 (LV) ±3.0% [iv] 48% 38% 14%
Nestpoint[124] January 2–12, 2026 907 (LV) ±3.0% – 60% 24% 16%
David Binder Research (D)[125][E] December 6–10, 2025 800 (LV) ±3.5% [v] 55% 39% 6%
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Notes

  1. [a]
    Kiley was elected as a Republican before registering as an independent in 2026.[79]
  2. [b]
    Romero held office as a Democrat, defecting to the Republican Party in 2024.
  3. [c]
    Key:
    A – all adults
    RV – registered voters
    LV – likely voters
    V – unclear
Partisan clients
  1. [A]
    Poll sponsored by the Blue Collar Coalition, a group funded by the California State Council of Laborers.[116]
  2. [B]
    Poll sponsored by Golden State Promise, a political action committee opposing the initiative.[116]
  3. [C]
    Poll sponsored by the Los Angeles Times.[121]
  4. [D]
    Poll sponsored by Kensington Avenue Strategies, a Republican strategy firm.[123]
  5. [E]
    Poll sponsored by Stop the Squeeze, a political action committee opposing the initiative.[126]
Poll phrasing
  1. [i]
    "A proposed citizens' initiative for the November 2026 state ballot is titled "Imposes One-Time Tax on Certain Individuals and Trusts. Initiative Constitutional Amendment." It imposes a one-time tax of up to 5% on taxpayers and trusts with covered assets valued over $1 billion; covered assets include businesses, securities, art, collectibles, and intellectual property, but exclude real property and some pensions and retirement accounts. It allocates 90% of these tax revenues for health care, 10% for food assistance or education-related programs; and prohibits using revenues to replace existing funding for these purposes. It exempts such tax revenues from constitutional requirements for school funding, budget reserves, and state spending limit. If the election were held today, would you vote yes or no?"[119]
  2. [ii]
    "The Billionaire Tax initiative calls for imposing a one-time 5% state tax on the total wealth of any California resident whose net worth is greater than 1 billion dollars. Supporters say it will provide much needed tax revenues and help offset the cutbacks being made by the Trump administration to existing state health care and food assistance programs. Opponents say its passage would undercut state tax revenues in the long run and stifle innovation as many of California's highest paying taxpayers and most successful individuals may choose to leave the state to avoid the tax. If you were voting today on the Billionaire Tax Initiative, would you vote Yes or No?"[119]
  3. [iii]
    "If the election were held today, how would you vote on this initiative?"[119]
  4. [iv]
    Participants were read the initiative's ballot title and summary.[123]
  5. [v]
    "Do you support or oppose the Billionaire Tax Act, which would impose a one-time five percent tax on the accumulated net worth of individuals in California with a net worth of one billion dollars or more?"[119]

References

External links

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