California voters reject Prop 40's 5% billionaire tax, AP projects

California voters rejected Proposition 40, a proposed one-time 5% tax on the net worth of the state's billionaires, following a campaign against it financed largely by Silicon Valley billionaires.

The Associated Press called the race at 9:38 Monday evening, when 83% of votes had been counted and 53.8% opposed the measure, the Washington Examiner reported. Business Insider put support at some 46%.

The measure targeted Californians with more than $1 billion as of Jan. 1, 2026, though real estate and certain retirement assets were excluded. Its sponsor, healthcare union SEIU-United Healthcare Workers West, proposed directing 90% of the money to healthcare programs.

The union and other backers said the revenue was needed to protect hospitals, clinics and Medi-Cal services against federal healthcare cuts made in 2025 under H.R. 1, the One Big Beautiful Bill Act. The billionaire-led opposition called the proposal "an everyone tax."

Investor and former gubernatorial candidate Tom Steyer was among the few billionaires who supported it. "The way this system works is they can literally create gigantic fortunes without paying tax," Steyer told Business Insider.

Steyer backs a federal billionaire tax and said that if Proposition 40 is "not the way to skin the cat, don't come back and tell me there's no way to skin the cat."

"A lot of messaging went around this: ‘You’re next.’ And I think that messaging resonated with people," Wayne Winegarden, a senior fellow at the Pacific Research Institute, said, according to Fox Business.

The Examiner said passage would have made the measure the first major tax on general wealth rather than income in modern U.S. history. The Associated Press described its defeat as a win for opposing Democratic leaders, including Gov. Gavin Newsom, who may run for president in 2028.

Political divisions

The California Democratic Party and major state unions supported Proposition 40, alongside Vermont Sen. Bernie Sanders and California Rep. Ro Khanna. Newsom opposed it, as did former Orange County congresswoman Katie Porter, the California Medical Association and the California Teachers Association.

Newsom and Porter said the tax would encourage wealthy residents to leave and reduce tax revenue. Newsom and some other opponents preferred a federal wealth tax.

Both parties' candidates for governor and Planned Parenthood Affiliates of California opposed the measure, citing its structure as a one-off tax that would fund only certain healthcare programs.

Nobel Prize-winning economists Daron Acemoglu and Joseph Stiglitz supported the proposal. In an earlier open letter, economists said California income tax paid by billionaires from 2019 to 2025 was "only 1.6% of their $1.4 trillion wealth gain."

Campaign spending

The Guardian reported that billionaires spent nearly $425 million opposing the measure, making it California's most expensive opposition campaign. Google co-founder Sergey Brin gave at least $132 million, far more than any other donor.

The coalition included Google's other co-founder, Larry Page, venture capitalists John Doerr and Vinod Khosla, PayPal and Palantir co-founder Peter Thiel and Stripe CEO Patrick Collison.

A San Francisco Chronicle analysis found roughly $389 million was spent against the measure, including to put two counter-measures before voters, compared with $33 million in support.

On Oct. 6, Saikat Chakrabarti, a former Stripe engineer and political adviser who supported the tax, wrote on X that it would reduce the poorest California billionaire's income while providing health insurance to millions of the poorest Californians.

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. In exchange, millions of the poorest Californians will get health insurance.

That's the tradeoff billionaires are not willing to make.

— Saikat Chakrabarti (@saikatc) October 6, 2026

Revenue projections differed. Proponents put the yield at $100 billion, but a study cited by CBS News estimated it might bring in only about $30 billion.

The counter-measures, Propositions 41 and 42, could each have blocked the tax even if it passed, provided either received more yes votes than Proposition 40. Tax supporters called them "poison pills."

Proposition 42, which would ban new state taxes on personal property, led during the count, while Proposition 41 looked headed for defeat, the Chronicle said.

Most Californians vote by mail. Ballots postmarked by Election Day are counted if they arrive within a week.