California Prop 40: Will Voters Pass the Billionaire Wealth Tax?

With 51 % of ballots counted, California voters appear poised to reject Proposition 40, the one-time 5 % “billionaire tax.” Unofficial returns show 56.5 % voting No and 43.5 % voting Yes, a margin of roughly 857 000 votes statewide. Proposition 40 would levy a single 5 % tax on the net worth of individuals and trusts whose assets exceed $1 billion. Supporters, led by the California Nurses Association and several progressive advocacy groups, project the measure could generate about $100 billion for Medi-Cal expansion, universal school meals, and tuition-free community college. Backers framed the proposal as a way to “make the ultra-rich pay their share” in a state where the top 0.1 % control an estimated 20 % of household wealth. Opponents—including the California Chamber of Commerce, Silicon Valley tech founders, and bipartisan fiscal moderates—warned the tax would spur an exodus of high-net-worth residents, depress capital investment, and produce volatile revenue because it ties collections to asset valuations that can swing with the markets. They also highlighted potential constitutional challenges, arguing the measure conflicts with federal prohibitions on wealth taxes and could face lengthy litigation before any dollars reach state programs. Early precinct data show the No vote strongest in traditionally business-friendly counties such as Orange (62 % No) and San Diego (58 % No), while urban centers with higher progressive turnout like San Francisco and Alameda are backing the tax. Los Angeles County is split almost evenly, amplifying the importance of outstanding mail-in ballots there. Under California law, county registrars have until Nov. 17 to finish counting, meaning final certification may take weeks if the gap narrows. If Prop 40 fails, legislative leaders say they may revisit the concept in 2028 with a lower rate or phased-in surcharge. Meanwhile, Governor Gavin Newsom—who remained neutral—faces mounting pressure to propose alternative funding sources for the state’s $12 billion Medicaid expansion shortfall and a projected $8 billion K-12 nutrition gap. Investors are also watching closely: a rejection would remove an immediate threat of retroactive taxation on unrealized gains next fiscal year, potentially lifting a cloud over California-based IPOs slated for 2027. Voters can track updated tallies on the Secretary of State’s website; the next scheduled results release is 8 p.m. Pacific.