California’s proposed billionaires tax appeared poised to be rejected Wednesday in one of voters’ final verdicts during an election week that saw a surge of anti-billionaire sentiment elsewhere.
THE latest results Wednesday afternoon showed California’s Proposition 40 down by more than 11 percentage points, with 60% of votes counted but the race has not yet been officially called.
The referendum would amend the California constitution and impose a one-time 5% tax on California residents and trusts with assets exceeding $1 billion on Jan. 1, 2026. The revenue would go primarily toward health care, as well as food assistance and education.
Certain assets, such as real estate and certain retirement accounts and pensions, have been excluded.
The measure is estimated to affect about 200 billionaires in the state. It faced fierce opposition from many Big Tech players and lost strength among voters as election day approaches.
Google (GOOG, GOOGL) co-founder Sergey Brin was one of the most vocal opponents of this measure. He paid $102 million to a political committee to fight the measure.
Other billionaires have drawn up detailed plans in case this passes. Meta (META) CEO Mark Zuckerberg told his board: according to a New York Times report, that they had to take steps to protect him from the tax or he would publicly put his house in Palo Alto up for sale.
The measure also faced opposition from some Democrats, who argued it wouldn’t work.
Outgoing California Governor Gavin Newsom emerged as an opponent, arguing that billionaires would avoid taxes and leave the state. He cited a report from the California Legislative Analyst’s Office which estimated that the measure could temporarily increase state revenue, but could have an overall impact on regular income taxes and would “reduce state revenue by less than $1 billion per year.”
Across the country, voters in red and blue states have delivered their verdict on wealth inequality and the influence of the ultra-rich. In Texas, where Elon Musk spent more than $200 million to keep the Senate seat in Republican hands, voters flipped the Democratic seat and made clear their unease with AI data centers.
Tuesday’s results also saw a string of victories for candidates representing the Democratic Socialists of America, many of whom ran on explicitly anti-billionaire platforms. At least seven DSA members will serve in Congress next year, as well as the mayor’s offices of Los Angeles and Washington, DC.
California voters were also weighing competing measures: Proposition 41 And Proposition 42, which were introduced by opponents of Proposition 40 to prevent the wealth tax from taking effect.
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