A last-minute guide to California’s Prop. 40, the billionaire tax

California voters will decide on Nov. 3 on a wealth tax levied against 200 billionaires in the state. They’ll also be voting, however, on two separate propositions specifically designed to cancel out the billionaire tax.

Proposition 40, dubbed the billionaire tax, was put on the ballot by SEIU-United Healthcare Workers West (SEUI-UHW), one of the most influential unions in the state. The union is proposing a one-time 5% tax on about 200 individuals with a net worth over $1 billion. 

Those 200 individuals are currently collectively worth around $2.3 trillion, according to the National Bureau of Economic Research and pay only roughly 0.2% of their total wealth in taxes due to current tax policy.

Most of the money collected from the wealth tax will be earmarked for health care, with some directed to food assistance and public schools.

The tax would apply to any billionaire who resided in California as of Jan. 1, 2026.

Interest groups made up mostly of wealthy individuals got two propositions, 41 and 42, on the ballot. This is where it gets a little confusing. 

If Prop. 40 passes and propositions 41 and 42 don’t, then billionaires can expect to pay that 5% tax. But if either of the other latter propositions gets more votes than Prop. 40, the wealth tax will essentially be canceled out and the Legislature will not be able to collect that money.

Why a billionaire tax?

The proposition was introduced in response to federal cuts coming from H.R.1. California is estimated to lose around $30 billion worth of Medi-Cal funding annually, according to the California Budget and Policy Center.

The revenue from the wealth tax would total around $100 billion over five years.

Ninety percent of the revenue from the wealth tax would go into a special fund addressing Medi-Cal and health care cuts, while 10% would be allocated to public education and food assistance.

Campaign finance data from the Secretary of State shows supporters, led mostly by SEIU-UHW, have raised $31.8 million to support the measure.

Public support for the wealth tax has dipped below the 50% needed to pass, according to a Public Policy Institute of California poll conducted between Oct. 16 and Oct. 22.

Only 46% of likely voters said they would support the wealth tax, with Republicans and Independents opposing it most. Inversely, 48% and 51% would support propositions 41 and 42, respectively.

Support among young voters, however, remains high. In the 2026 Power California Youth Poll, 72% of voters aged 18-30 said they support higher taxes on billionaires and multi-millionaires.

“Young people have lived with the greed of the billionaires for a long time,” said Alan Vargas with the Riverside Young Democrats during a Yes on 40 virtual news conference. “And I think that it’s time, and many of our members think that it’s time, that those billionaires reinvest in us, in the communities that they have worked to the bone while they are hoarding a lot of that wealth.”

Proposition 40 is endorsed by a coalition of Democratic leaders — from U.S. Rep. Bernie Sanders to a handful of members of the California Legislative Latino Caucus — who have framed this as a working-class and Latino issue.

Lorena Gonzalez, president of the California Federation of Labor Unions, said during a Friday Yes on 40 virtual press conference that federal cuts will disproportionately affect Latino families and children. Latinos made up 51% of Medi-Cal enrollees in 2024, with Latino children making up 38%, according to data compiled by the UCLA Latino Policy and Politics Institute.

“We’re hard workers; we pay our taxes,” Gonzalez said, “let’s make them pay theirs as well,” she said of the state’s 200 billionaires.

“The billionaires make too much money,” Sen. Lena Gonzalez (D-Long Beach) said Friday. “And it's the hardworking people … that we know that are making this state of California the fourth largest economy ... What is in it for us?”

Billionaires fight back

Californians have likely been seeing the onslaught of No on 40 ads running leading up to Election Day. 

Most of the ads are funded by Building a Better California, a Political Action Committee (PAC) created and funded this year by tech billionaires including Google co-founder Sergey Brin and former Google CEO Eric Schmidt, among others. 

The No on 40 campaign has vastly outspent Yes on 40, raising nearly $430 million to fight the wealth tax, according to campaign finance data. Billionaires contributed most of that money.

These billionaires and affiliated PACs raised enough signatures to place Propositions 41 and 42 on the ballot, doubling their chances to block the wealth tax.

Prop. 41 would cancel any new state taxes passed after Jan. 1, 2026, counting the revenue toward the state spending limit. 

Prop. 42 would ban new taxes on personal property, including investment accounts like 401ks and anything else people own besides real estate. The measure would prohibit retroactive taxes on those items.

Can Prop. 40 eventually target anybody? 

The ads frame Prop. 40 as dangerous for the average Californian, arguing that the Legislature could expand the tax to anybody. The proposition specifically targets, however, individuals whose personal assets total or exceed a billion dollars. Any amendment to the proposition would require a two-thirds majority, similar to how many laws are passed.

Another argument against the billionaire tax is that the state will be worse off mainly by these billionaires leaving the state and taking their workforces with them.

The Yes on 40 campaign has pushed back on this idea, saying the data shows very few, if any, billionaires actually moved out of the state before the Jan. 1, 2026 deadline. Since the one-time tax is retroactive, even if any of the 200 individuals targeted do leave the state, they will still be responsible for paying the tax.

Prop. 40 support includes Sanders and top Latino lawmakers; the opposition has Gov. Gavin Newsom and gubernatorial candidate Xavier Becerra.