5% Billionaire Wealth Tax: Inside California’s Prop 40 Vote
California is currently counting votes on a high-stakes ballot initiative that could fundamentally change how the state’s ultra-wealthy are taxed. As of 09:45 UAE time on November 4, with roughly 49 per cent of ballots processed, early returns show a lean toward the ‘no’ side, leaving Proposition 40 facing a tough fight to pass.
Put to voters during the mid-term elections on November 3, Proposition 40 targets roughly 200 billionaires. If passed, it introduces a one-time 5 per cent wealth tax on California taxpayers and trusts holding assets valued over $1 billion. The levy applies to anyone who was a resident on January 1, 2026, and calculates worldwide net worth while excluding real estate held directly. Taxpayers can settle the bill via a lump sum or through structured payments, and the collected revenue is earmarked for a dedicated reserve fund.
Labor groups and political figures have rallied behind the initiative. Supporters include US Senator Bernie Sanders, the California Democratic Party, the California Labor Federation, and the Teamsters, who argue the funds are urgently needed to back state healthcare programs, food assistance, and public education.
Conversely, Governor Gavin Newsom has led the opposition, warning that a state-level wealth tax will drive billionaires away, even though he supports a federal billionaire tax framework. Business and professional groups, including the California Taxpayers Association, the California Teachers Association, and the California Medical Association, have similarly lined up against the measure.
The path forward is further complicated by competing ballot items. If either Proposition 41 or Proposition 42 draws more votes than Proposition 40, the tax is entirely nullified. Proposition 42, which is backed by the governor, specifically aims to bar new taxes on financial assets.
