Nine figures of opposition spending later, the California billionaire tax is dead. Voters rejected Proposition 40, a one-time 5% tax on the net worth of the state’s richest residents, according to projections from NBC News, CNN and the Associated Press. The measure would have been the first billionaire tax in the country.
Here’s the thing: the money was supposed to fill a hole. Supporters wanted it to replace federal healthcare cuts, and now that hole is still there. It also lands as California faces other economic jolts, like losing its Fortune 500 crown to Texas.
What the California Billionaire Tax Would Have Done
The measure targeted California residents worth more than $1 billion, with residency counted as of Jan. 1, 2026. Payments would have run over five years. Supporters earmarked at least 90% of the revenue for healthcare, according to NBC News.
How much it would have raised depends on who you ask. Backers said $100 billion. However, the state’s Legislative Analyst’s Office estimated “tens of billions,” a much softer number, according to The Hill. Reports also differ on how many billionaires the tax would have hit: about 200 in some outlets, about 250 in others.
Prop. 40 Count Was Closer Than the Early Returns
The early numbers looked rough for the “yes” side. On Nov. 4, “no” led 56% to 44% with about three-fifths of the expected vote counted, ABC News reported. By Monday morning, AP data had “yes” trailing by roughly 6 points, with more than 20% of ballots still uncounted, per Yahoo.
Los Angeles County was the strongest region for the tax, with “yes” ahead by about 10 points with nearly all votes counted. Even so, it wasn’t enough.
We could not verify the final margin, so treat that 6-point figure as the latest snapshot, not the last word.
Billionaires Spent Big to Kill the Wealth Tax
The opposition outspent everyone. Billionaire donors gave more than $333 million to a nonprofit called Building a Better California, The Hill reported. Other tallies put opposition spending between roughly $304 million and $317 million. Either way, that is an enormous sum to protect a tax bill.
SEIU-UHW sponsored the measure and said it gathered 1.6 million signatures, far above the 874,641 required. Backers included Sen. Bernie Sanders, Rep. Ro Khanna, the California Democratic Party and the AFL-CIO and Teamsters unions. Gov. Gavin Newsom, the California Teachers Association, Planned Parenthood and San Francisco Mayor Daniel Lurie opposed it. Newsom has been making other headlines lately, too, after he commuted all 548 California death sentences.
Khanna called it “the most important ballot initiative in America.” On election night he said that if it lost, it would be because billionaires “lied” and acted from “self-interest.”
Why Even Some Tax-the-Rich Voters Said No to Prop. 40
This was not a simple left-versus-right vote. Many progressives who favor taxing the wealthy still opposed Prop. 40 because it was a one-time tax that mostly benefited one policy area, healthcare, according to NBC News. Newsom backs a federal billionaire tax but opposed this state version.
So the result is not necessarily a rejection of higher taxes on the wealthy. Instead, it may just be a rejection of this particular tax.
What the Billionaire Wealth Tax Loss Means for Your Wallet and Your Care
If you rely on Medi-Cal or a safety-net clinic, this one matters. Supporters intended the money for healthcare, including to offset federal cuts to Medicaid and other healthcare programs. SEIU-UHW’s Dave Regan warned that without action, 3.5 million Californians could lose coverage, per ABC7. With the tax gone, officials have announced no replacement funding.
For taxpayers elsewhere, the vote is a signal. A wealth tax just got a very public test in the biggest state in the country, and it lost after a nine-figure campaign against it. That is not the only election story out of this cycle, as the Zohran Mamdani mayoral win in New York City shows.
What Happens Next
Three things to watch:
- The final count. The Secretary of State still has to certify results, and we could not confirm a final margin.
- Props. 41 and 42. Opponents backed these countermeasures. If either got more votes than Prop. 40, it nullifies the tax. Prop. 42 would bar taxes on personal savings, assets and retirement holdings. Its final result was not available to us.
- The healthcare gap. Whether Newsom and the Legislature find another way to cover the Medi-Cal cuts is the real question left on the table.
Supporters have vowed to keep pushing, though they have given no specifics. Billionaires won this round. The bill for healthcare cuts hasn’t gone anywhere, so who picks it up?
