California billionaires won a fierce campaign over a ballot measure, causing the proposed one-off tax on their wealth to fail. The campaign surrounding Proposition 40 was the most expensive in the state's history.
Proposition 40 proposed a one-off tax of 5 per cent on all individuals in California with a net worth exceeding $1 billion on 1 January 2026. It was proposed by the healthcare union SEIU-United Healthcare Workers West, and stipulated that tax revenues would be used to fund healthcare programmes, with a portion allocated for education and food assistance. The proposal was supported by major unions in the state and progressive politicians such as Vermont Senator Bernie Sanders and California Congressman Ro Khanna.
Proponents of Proposition 40 presented it as a solution to drastic cuts in healthcare under Trump's One Big Beautiful Bill Act. Opponents, led by wealthy billionaires, ran an influential campaign arguing that the tax on billionaires was actually a "tax on everyone".
The campaign surrounding Proposition 40 involved mutual negotiations between tech billionaires and Democratic leaders, including Governor Gavin Newsom, who was firmly against the measure. Both Democratic and Republican candidates for governor opposed Proposition 40. Organisations such as Planned Parenthood Affiliates of California, a lobbying arm of a healthcare group, were also against it. Opponents highlighted the structure of Proposition 40 as a one-off tax that would fund only specific healthcare programmes.
The loudest critics of Proposition 40 were the state's billionaires. Among the donors to the anti-campaign were executives from Google, Palantir, DoorDash, Stripe and Reddit, along with several prominent venture capitalists. The largest donor was Google co-founder Sergey Brin, who contributed at least $132 million to fight the tax, according to campaign finance data. Billionaires launched a battle costing nearly $425 million against Proposition 40, making it the most expensive anti-campaign in the state's history. In the first two weeks of October, spending exceeded $2.5 million per day according to the latest campaign finance data.
Part of the anti-campaign strategy was launching two separate counter-measures on the ballot, Propositions 41 and 42. Proposition 41 directly targeted the billionaire tax, while Proposition 42 was a general proposal to limit certain new taxes and would ban any taxation of billionaire wealth. If either of these measures received more "yes" votes than Proposition 40, it would prevent the tax from taking effect even if it were passed. Proponents of the billionaire tax called Propositions 41 and 42 "poison pills".
Such an outcome could weaken momentum across the country in demands that billionaires pay a fair share and in states' efforts to enact new laws on taxing the ultra-wealthy.
