California’s Proposition 40: A Closer Look at the Billionaire Tax Measure

Nearly a week after Election Day, uncertainty surrounds the fate of California’s Proposition 40, widely regarded as a crucial ballot measure. The Associated Press reports that as of Monday morning, ‘no’ votes lead ‘yes’ votes by about 6 percentage points. However, over 20% of ballots remain uncounted, preventing the AP from declaring a result.

Proposition 40 proposes a one-time 5% wealth tax on California’s more than 200 billionaires, making it the country’s most assertive state-level tax on the wealthy. Advocates believe this could generate approximately $103 billion to counter federal healthcare and food assistance cuts under President Donald Trump. Supported by a California healthcare workers’ union and Senator Bernie Sanders (I-Vt.), the proposition faces strong opposition. Tech industry leaders and other affluent residents have invested heavily in ads against it, arguing it could drive wealth out of the state and harm the tax base.

The proposition’s passage looks uncertain, as it performs best in Los Angeles County, where ‘yes’ votes lead by 10 points, but most ballots there are counted. Uncounted votes in regions opposing the measure, such as San Diego, Sacramento, and the Bay Area, challenge supporters. The significant ‘no’ vote share even in Democratic areas suggests successful impact from negative ads.

Failing to pass would mark a progressive setback in an election boosting Democrats to House and Senate control amid widespread frustration at elite influence. A poster at a San Francisco rally on October 3, 2026, reflects the sentiment, showing a ‘Tax The Rich’ slogan.

Even if Proposition 40 gains ground in remaining ballots, a related challenge looms. Proposition 42, narrowly leading with 52% to 48%, aims to ban new taxes on personal property, including financial assets. If both pass, Proposition 40 needs more votes than Proposition 42 to become law. Another competing measure backed by wealthy interests is on track to fail.

Opponents of the billionaire tax pooled over $300 million to defeat it, marking the most costly campaign against a state ballot initiative since at least 1999, as reported by the San Francisco Chronicle. This sum includes funds for supporting competing measures.

Although sponsored by SEIU-United Healthcare Workers West, Proposition 40 sparked division among traditional left allies. The state’s largest teachers union and Planned Parenthood affiliate opposed it. Critics disapproved of funding allocations, focusing mainly on healthcare, and protested exclusion from its formulation.

Governor Gavin Newsom, a potential 2028 Democratic presidential hopeful, opposed the measure, claiming it would drive the wealthy away and reduce future state tax revenue. Representative Ro Khanna (D-Calif.), a major supporter, accused opponents of dishonesty in defeating the tax.

“They would be as well off as they were on Labor Day if they had to pay this 5% tax, and millions of California kids wouldn’t lose insurance because this proposition may not pass,” Khanna stated. “They lied, but they’re not going to get away with it in 2028, especially after the night we’ve had tonight.”