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California’s proposed billionaire tax, Proposition 40, is on the November 3, 2026, ballot. It would impose a one-time tax of 5% on the covered net worth of people who were California residents on January 1, 2026, directing most of the proceeds to public health care. The fight is not a simple partisan split: SEIU-United Healthcare Workers West and U.S. Sen. Bernie Sanders support the measure, while Gov. Gavin Newsom and several prominent health, education, labor, and business groups oppose it.
What would Proposition 40 do?
The measure would tax covered billionaires based on their California residence on January 1, 2026. The tax would be due in 2027. Taxpayers could pay in installments over five years, but spreading payments would cost more.
The measure covers assets including businesses, securities, art, collectibles, and intellectual property. It generally excludes real estate, pensions, and retirement accounts, with the official summary also specifying exclusions for some pensions and retirement accounts. The proposed law would exempt the proceeds from certain constitutional rules governing school funding, budget reserves, and state spending limits.
Ninety percent of proceeds would have to support public health-care services. The remainder would go to education, food assistance, and tax administration.
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Why are Democrats on opposing sides?
Supporters see the tax as a way to raise substantial money for health care when federal cuts threaten state services. The Yes campaign’s argument in the official voter guide says federal cuts have eliminated coverage for more than a million Californians and raised premiums for millions more; those are campaign claims, not independent findings. Its appeal is that billionaires should contribute rather than leave the middle class to shoulder the costs.
Opponents argue that a large, one-time levy could destabilize state finances, deter or drive away wealth, and prove difficult to administer. The No campaign calls Proposition 40 “a flawed, one-time tax scheme” and warns of a loophole that could expose Californians to taxes. Its voter-guide argument ends: “No safeguards, no accountability.” These are also campaign claims, not settled conclusions about the measure’s effects.
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| Question | Supporters’ case | Opponents’ case |
|---|---|---|
| What is the priority? | Raise money for public health care as federal funding is cut. | Avoid a tax design they say could hurt the economy and state budget without lowering health-care costs. |
| What kind of revenue is it? | A one-time infusion that could provide significant resources. | A temporary windfall may not offer dependable funding for ongoing services. |
| What is the main concern? | That wealthy taxpayers should help protect public services. | That uncertain valuations, taxpayer responses, and administration could erode the benefits or shift costs. |
The official voter guide names SEIU-UHW and Sanders among supporters. Named opponents include the California Teachers Association, California Medical Association, California Children’s Hospital Association, California Professional Firefighters, and State Building and Construction Trades Council of California. The range of organizations on each side is why the dispute does not map neatly onto party labels.
Newsom’s opposition and the proposed compromise
SEIU-UHW offered Newsom a compromise: replace the initiative’s 5% rate with a 2% tax in a legislative alternative, in exchange for the governor’s support and withdrawal of the ballot measure. Newsom’s office said the lower rate did not change his opposition. UCLA political science professor Martin Gilens told the Associated Press that “there’s kind of a perfect storm” reinforcing existing sympathy for taxing the well-to-do.
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The nonpartisan Legislative Analyst’s Office (LAO) estimates that Proposition 40 probably would raise tens of billions of dollars over several years. It also cautions that both the amount and timing are very hard to predict: wealth values fluctuate, and taxpayers may take steps to reduce their liability. The estimate is a forecast, not a guaranteed collection.
SEIU-UHW has stated a goal of raising $100 billion, mainly for California’s Medicaid system after federal cuts. That is the union’s target, not the LAO’s independent estimate.
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The LAO also forecasts that taxpayer responses could reduce state income-tax revenue by less than $1 billion per year. It estimates tax-administration costs could reach tens of millions of dollars per year for several years. These possible ongoing effects matter because the levy itself is one-time: the state would need to weigh a temporary infusion against potential continuing revenue losses and the cost of administering the tax.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How would the state assess the tax?
California does not routinely value and tax personal wealth in the way Proposition 40 would require. CalMatters reports that implementation would involve valuing assets such as shares, investment accounts, business interests, art, wine, and cars. Publicly traded stocks are comparatively straightforward to price; privately held businesses and unique assets could be harder to assess and more likely to prompt disagreement. Experts interviewed by CalMatters expect litigation, but that is reported analysis—not a final legal determination of how the tax would be administered.
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Those valuation questions connect directly to the revenue forecast. If an asset’s value is disputed or a taxpayer changes behavior, the amount collected—and when it arrives—may differ from initial expectations. The LAO’s uncertainty is therefore not just about the size of billionaires’ fortunes, but also about how the tax works in practice.
Could another ballot measure or a lawsuit affect Proposition 40?
Yes. The LAO says Proposition 40 could be prevented from taking effect even if it receives a majority of yes votes if Proposition 41 or Proposition 42 receives more yes votes and a court finds the measures conflict. The proposed act also anticipates validation litigation and provides for expedited proceedings. Whether a conflict will be found, or litigation will change the measure’s fate, remains unresolved.
What is at stake before Election Day?
Proposition 40 qualified for the ballot after California announced its eligibility on June 17, 2026. The Secretary of State set 874,641 valid signatures as the qualification threshold; 962,106 projected valid signatures was the random-sampling threshold. Those are ballot-qualification figures, not votes cast for or against the measure.
Campaign spending shows the contest’s financial scale, but the totals are a dated snapshot. As of its October 1, 2026, explainer, CalMatters reported more than $138 million in campaign spending by Sergey Brin and more than $205 million raised by opponents. Totals can change as the campaign continues.
For voters, the central trade-off is between the prospect of a large, near-term health-care allocation and the risks of uncertain receipts, continuing fiscal effects, difficult valuations, and legal challenges. The LAO’s forecast provides a range of scale, not a guarantee; supporters’ and opponents’ claims explain their arguments, not the eventual outcome.
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