California voters reject one-time tax on billionaires

California voters have rejected a proposal to tax billionaires’ wealth once to help fund healthcare, ending a costly campaign that split Democrats, labor groups and some of the state’s wealthiest residents.

Proposition 40 would have imposed a 5% tax on the assets of wealthy California residents, with the proceeds directed largely to healthcare. The Associated Press called the race against the measure, according to NPR. The BBC reported that it took nearly a week of counting after the midterm election to project the result.

The sources describe the tax threshold differently. NBC News reported that the full 5% tax would have applied to residents worth more than $1.1 billion, with a smaller, phased-in tax available for those worth between $1 billion and $1.1 billion. The Guardian described the proposal as a tax on individuals worth more than $1 billion as of Jan. 1, 2026. CBS News reported that real estate and certain retirement assets would have been excluded. NBC News said the tax would have applied retroactively to people living in California on Jan. 1, 2026.

Supporters estimated the measure would raise $100 billion over five years, CBS News reported. It said 90% of the proceeds would have gone to healthcare, with the remaining 10% available for education, food assistance and administering the tax. SEIU Healthcare Workers West, a healthcare union, sponsored the proposal. Its supporters argued that California needed money to offset federal healthcare cuts under the 2025 law known as the One Big Beautiful Bill Act and protect hospitals, clinics and Medi-Cal services.

The California Democratic Party backed the measure, as did Sen. Bernie Sanders of Vermont and Rep. Ro Khanna of California, who campaigned for it. Nvidia chief executive Jensen Huang was among the billionaires who supported it. “I don’t mind paying taxes; the more you make, the more taxes you pay, so I’m okay with that,” Huang told CBS News.

Gov. Gavin Newsom and gubernatorial candidate Xavier Becerra opposed Proposition 40. Newsom argued that taxing billionaires nationally would be preferable to a California-only measure. Opponents said the tax could drive wealthy residents from the state, reducing other tax revenue. The California Teachers Association and California Medical Association also opposed it. NBC News reported that some progressives objected to its one-time structure and its focus on healthcare rather than a broader range of needs.

Money poured into the fight. The Guardian reported that opponents mounted a nearly $425 million campaign, the most expensive opposition effort in California history, and said Google co-founder Sergey Brin contributed at least $132 million. In late October, opponents were outspending supporters 250 to 1 on advertising, according to figures from AdImpact cited by NBC News.

Opponents also placed Propositions 41 and 42 on the ballot. The measures sought to restrict taxes and could have blocked Proposition 40 if either had received more votes, even had the billionaire tax passed. Supporters called them “poison pills,” The Guardian reported.

The projected revenue was disputed. CBS News reported that a Stanford University study estimated Proposition 40 might raise about $30 billion, rather than supporters’ $100 billion estimate, after some billionaires left the state. Other economists supported the measure, CBS News reported, arguing that California continued to attract venture funding.