California Voters Weigh Proposition 40, a One-Time 5 Percent Tax on Billionaires

California voters are deciding on Proposition 40 on November 3, 2026, a measure that would impose a one-time 5 percent tax on the net worth of individuals and trusts exceeding $1 billion.

About 200 Californians would be affected based on net worth as of January 1, 2026. The tax would be due with 2027 tax filings, with an option to pay in five equal installments subject to a 7.5 percent annual deferral charge on the remaining balance.

Revenue would go into the "2026 Billionaire Tax Reserve Fund." Ninety percent would fund Medi-Cal and other health coverage programs, and 10 percent would go to education and food assistance.

The campaign has drawn significant spending. As of October 22, opposition committees had raised $140.5 million, while supporters had raised $33.2 million. Total contributions reached $173.7 million.

Supporters include the Service Employees International Union-United Healthcare Workers West, Senator Bernie Sanders, and Representative Ro Khanna. They argue the tax would prevent cuts to essential services and make billionaires pay a fair share after recent federal tax breaks.

Opponents include the California Teachers Association, the California Medical Association, and the California Business Roundtable. They argue the measure would trigger capital flight, reducing long-term state revenues and harming the broader economy.

Proposition 40 also contains a competing-measures clause. If it receives more votes than Propositions 41 and 42, it would nullify those measures, which seek to limit new state taxes and protect retirement holdings. If Propositions 41 and 42 receive more votes, they would nullify Proposition 40.

The outcome of the vote is expected to set a precedent for wealth tax proposals in other states.