California Voters Reject Proposition 40 Wealth Tax on Billionaires

“A reckless experiment conducted on our state’s economy with little regard for the harms it would cause,” according to a joint statement from the No on 40 coalition.

California voters rejected Proposition 40 on Monday evening, shooting down a proposed 5% wealth tax on the state’s more than 200 billionaires that would have helped offset recent federal cuts to healthcare, education, and food assistance.

The Associated Press called the race as the “no” side led 52.8% to 47.2% with 83% of the vote counted, sealing the defeat of an initiative that required a simple majority to pass.

The ballot measure emerged from an aggressive push by SEIU United Healthcare Workers West to fill state budget gaps triggered by President Donald Trump’s “One Big Beautiful Bill,” which cut nearly $1 trillion from Medicaid over the next decade.

Opponents of the measure argued that the one-time tax would drive billionaires out of the state, inflicting long-term damage on the state’s tax base.

The nonpartisan Legislative Analyst’s Office estimated the tax would have brought in “tens of billions of dollars” over the next few years, though it warned that ongoing state income tax revenues could drop by less than $1 billion annually if wealthy residents left the state as a result.

Geographically, the map revealed a deeply fractured state. San Francisco and Alameda counties showed strong support for the measure, but voters in Santa Clara, San Mateo, and Contra Costa counties rejected it.

The Central Valley and the Inland Empire also voted down the initiative, while Los Angeles County stood out as the state’s most populous county to favor Proposition 40.

The broad opposition campaign—which included the California Medical Association, the California Primary Care Association, the California School Board Association, and Planned Parenthood Affiliates of California—joined forces with Gov. Gavin Newsom and Xavier Becerra to defeat the tax.

“Proposition 40 risked California’s economic competitiveness and fiscal stability, as well as the revenue we rely on to fund our top priorities — from education and healthcare to public safety and infrastructure,” the No on 40 coalition said in their joint statement.

Financially, the opposition outspent proponents by a wide margin, raising a collective $316 million compared to the $33.4 million raised by supporters of the tax.

Sergey Brin, who moved out of the state last year as it looked likely that the billionaires tax would make its way onto the ballot, contributed more than $100 million of his own money to fight the tax.

“Sergey Brin and the money was too much to overcome,” Silicon Valley Rep. Ro Khanna, one of the measure’s backers, told the Bay Area News Group.

A spokesperson for Building a Better California, a group funded by Brin and other tech billionaires that opposed Proposition 40, argued that voters protected the state from irreversible economic harm.

Meanwhile, companion ballot measures also saw decisive outcomes. Proposition 41, a second initiative that also sought to invalidate the tax if they both passed and it got more votes, was called by The Associated Press on Saturday as the “no” side led with 54.6% of the vote.

However, the fate of future wealth taxes remains tied to Proposition 42, an initiative backed by Sergey Brin that would prohibit future wealth taxes on personal savings, assets, and retirement holdings. The Associated Press had not yet called that race on Monday, though the “yes” side held a lead of 51.6% to 48.4%.

On election night, Dave Regan, president of SEIU United Healthcare Workers West, told reporters that if the initiative failed and Sacramento did not deliver a solution to the cuts, the union would take the fight back to the ballot in 2028.