California Voters Reject Proposition 40 Billionaire Tax

California voters have rejected Proposition 40, a first-in-the-nation ballot measure that would have imposed a one-time 5% tax on the wealth of the state’s billionaires. The Associated Press called the race on Monday, nearly a week after polling day on 3 November, as the final tallies confirmed a defeat for one of the most expensive and divisive campaigns in the state’s history.

The measure was failing by 52.8% to 47.2%, according to the Associated Press, after trailing from the first results on election night. The results remain unofficial until they are certified by the California Secretary of State, and counting continued into Monday. San Francisco was a notable exception to the statewide result, backing the measure by roughly 56% to 44%.

Proposition 40 would have applied to Californians whose net worth exceeded $1 billion and who were residents of the state on 1 January 2026. The tax, equal to 5% of their net worth, would have been due in 2027, with an option to spread payment over five years at additional cost. Real estate, pensions and retirement accounts were generally excluded. About 200 billionaires live in California, according to estimates cited in campaign coverage.

What the money would have funded

The measure was placed on the ballot by the healthcare workers’ union SEIU-United Healthcare Workers West, which estimated it could raise about $100 billion over five years. Ninety per cent of the proceeds would have gone to healthcare, chiefly Medi-Cal, the state’s Medicaid programme, with the remainder funding education, food assistance and tax administration.

Supporters argued the levy was needed because the Republican-controlled Congress had cut healthcare programmes to fund tax breaks for the wealthy. In their framing, it was time for the wealthy in California to “fill the gap” left by those federal cuts. Backers have said they could put a similar tax back on the ballot in 2028.

A record-spending campaign

The defeat came after an extraordinary spending gap. Opponents of the measure raised as much as $379 million, TechCrunch reported, including money from Google co-founder Sergey Brin, while supporters raised about $32 million — roughly a tenth as much. The billionaire-funded political action committee Building a Better California spent more than $304 million against Proposition 40, and Brin also backed two rival measures, Propositions 41 and 42, designed to cancel the wealth tax if it had passed. Proposition 42, which would prohibit new state taxes on personal property, was expected to pass.

Polling in the run-up to the vote had pointed to a narrow defeat. An October survey by U.C. Berkeley’s Institute of Governmental Studies found 50% of likely voters opposed the measure and 42% in favour, while a separate October poll by the Public Policy Institute of California put opposition at 52% and support at 46%.

Democrats divided

The result exposed a split inside California’s Democratic leadership. The state Democratic Party backed Proposition 40, and Senator Bernie Sanders of Vermont and Representative Ro Khanna of California campaigned in favour of it. But Governor Gavin Newsom opposed the tax, arguing that billionaires would find ways to avoid it or leave the state, and that a national tax on the wealthy would be a better approach.

That division echoes debates playing out in other states. New York City’s tax on luxury second homes was cleared by an appeals court last week, while in Pennsylvania, where Democrats have just taken full control, Governor Josh Shapiro has promised a sweeping state-level agenda. Voters also weighed in on other 2026 ballot measures across the country, from data-centre bans to a first-of-its-kind sports measure in Washington state.

For now, California will not become the first state to levy a wealth tax on its richest residents. Whether supporters return with a revised proposal in 2028, as they have suggested, will depend on whether they can close the spending gap — and win over a Democratic governor who has so far stood against the idea.