California's Prop 40 Falls Short, But Wealth Tax Fight Shows 'Billionaires Are Frightened by Voters'

Bombarded by hundreds of millions of dollars worth of often misleading ads funded by tech titans and other monied interests, California voters narrowly rejected Proposition 40, a one-time 5% tax on the state’s billionaires, but proponents of the measure to fund vital social programs said they'll try again in 2028.

Prop 40 was defeated 52.8% to 47.2%, according to The Associated Press. Also known as the California Billionaire Tax, the ballot measure was sponsored by Service Employees International Union-United Healthcare Workers West (SEIU-UHW) and would have imposed a 5% tax on the wealth of California residents and trusts worth more than $1 billion.

Proponents argued the tax would have generated tens of billions of dollars to help fund healthcare, food assistance, and public education programs facing funding pressures, including from cuts resulting from President Donald Trump’s attacks on Medicaid, the Supplemental Nutrition Assistance Program, and other lifelines.

The "No on 40" campaign—including efforts supporting Propositions 41 and 42, a pair of anti-Prop 40 poison pills—was bankrolled by some of Silicon Valley's wealthiest figures, led by Google co-founder Sergey Brin, who contributed upward of $100 million to a committee he established to defeat the measure.

Overall, billionaire opponents contributed approximately $378.4 million, compared with just $33.5 million raised by Prop 40 supporters, according to CalMatters.

“That is incredibly corrosive and corrupting to our democracy and our political system, and that’s been dominating the discussion here in California,” SEIU-UHW president Dan Regan told CalMatters.

Morris Pearl, a former managing director at the investment firm BlackRock who now chairs the advocacy group Patriotic Millionaires, said he's "sad that the ballot measure ultimately fell short, but the attention about what happened in California has sparked not only a national and international conversation around inequality, but also about how billionaires are frightened by voters who very clearly want to shake up the economic status quo."

Initial polling showed 55% of California voters supporting Prop 40 shortly after its introduction last year, and the measure soon won the backing of prominent national figures such as Sen. Bernie Sanders (I-Vt.), Congressman Ro Khanna (D-Calif.), and former US Labor Secretary Robert Reich.

But Prop 40 was opposed by California's Democratic establishment, with Gov. Gavin Newsom, Gov.-elect Xavier Becerra, and the mayors of most major cities coming out against the measure. So did the state NAACP, California Teachers Association, Planned Parenthood Affiliates of California, and other left-leaning groups.

The editors of the Los Angeles Times, San Francisco Chronicle, San Diego Union-Tribune, Orange County Register, San Jose Mercury News, and virtually every major newspaper in the state—the Sacramento Bee being the most notable exception—also urged voters to reject Prop 40.

The "No on 40" campaign's ads relied heavily on misleading scare tactics that portrayed the one-time tax on approximately 200 people as a threat to ordinary Californians. In one particularly deceptive AI-generated ad, bureaucrats terrorize suburban families, steal a bike and a scooter from children, and even try to take a baby's stroller, warning that every Californian would have to disclose their assets or face a 40% penalty.

"Make no mistake—what happened on November 3 was a referendum on the economy, which is why billionaires poured so much money into defeating Proposition 40 and retaining their grasp on their political and economic power," Pearl said. "It will take continued work with leaders from all political parties to fully tackle and address the problem that is extreme wealth concentration."

Economic justice campaigners are already looking forward to trying to pass a billionaire tax in 2028.

“That’s not a hypothetical," said Regan. "That’s our plan."

San Francisco organizer Nadia Rahman said: "And more broadly, we need to tax billionaires throughout the country. We should all demand the new 2027 Congress do so with the mandate the voters gave them last week."

"Contact your congressional representatives," she added, "and tell them to tax the rich."