Read the Measure
Review the certified ballot measure as it will appear this November
What the Measure Does
Proposition 40 (the 2026 Billionaire Tax Act, Initiative 25-0024) is on California's November 3, 2026 ballot. It would impose a one-time tax of up to 5% on California residents and trusts with covered assets over $1 billion as of January 1, 2026. Covered assets include businesses, securities, art, collectibles, and intellectual property. Real estate, pensions, and many retirement accounts are generally excluded. The tax would be due in 2027, with an option to spread payments over five years at an extra charge.
The tax is retroactive to January 1, 2026—months before Election Day. People who were California residents on that date can still owe the tax even if they later move. Ninety percent of revenue would go to health care; 10% to education or food assistance. The measure also exempts that money from the state's school-funding guarantee, budget-reserve rules, and spending limit.
Supporters still project about $100 billion. The Legislative Analyst's Office does not. The official ballot analysis estimates a temporary increase of tens of billions of dollars over several years, plus a possible ongoing drop of less than $1 billion a year in income tax if billionaires leave or change their finances. An August 2026 UC Berkeley IGS poll found 48% Yes, 41% No, and 11% undecided among likely voters—a close race with a large partisan split.
The Secretary of State certified the measure on June 25, 2026 after finding it eligible on June 17 with a projected 980,438 valid signatures. Propositions 41 and 42 on the same ballot include conflict clauses: if either receives more Yes votes than Prop 40, Prop 40 can be blocked even if it also passes.
By September 2026 the air war was underway. Opposition spots featuring Gov. Gavin Newsom and gubernatorial candidates Xavier Becerra and Steve Hilton began running statewide. AdImpact tracking cited about $88 million in reserved TV and digital ads through Election Day. Building a Better California, the main opposition committee, had raised about $118 million, including $82 million from Google co-founder Sergey Brin. Committees tied to Props 40, 41, and 42 had already raised more than $140 million combined.
⚠️ The California Democratic Party endorsed Prop 40, but Gov. Newsom, Xavier Becerra, the California Teachers Association, California Medical Association, Planned Parenthood Affiliates of California, California Professional Firefighters, building trades, San Jose Mayor Matt Mahan, and San Francisco Mayor Daniel Lurie oppose it. They warn a one-time tax cannot fix ongoing health-care costs and can drive the state's largest taxpayers out.
Where the Campaign Stands
Prop 40 is a close, partisan fight. The latest public poll of likely voters was 48% Yes to 41% No, with 11% undecided. Labor and the California Democratic Party are split. Money on the No side is already in nine figures.
Yes on 40
The Yes campaign is led by SEIU-UHW (Save California Health Care and Public Education). It argues federal health-care cuts will close hospitals and that an estimated 200 California billionaires can cover a one-time 5% tax.
- SEIU United Healthcare Workers West
- California Democratic Party
- Sen. Bernie Sanders, Rep. Ro Khanna, Supt. Tony Thurmond
- Teamsters California, AFSCME California, UNITE HERE Local 11
No on 40
The No campaign and competing Props 41 and 42 argue the tax is retroactive, legally vulnerable, and a one-time sugar high that drives capital out of California. Health and education groups say they were not consulted and that it does not solve ongoing Medi-Cal costs.
- Gov. Gavin Newsom, Xavier Becerra, Steve Hilton, Rep. Kevin Kiley
- California Teachers Association, California Medical Association, Planned Parenthood Affiliates of California
- California Professional Firefighters and State Building and Construction Trades
- San Jose Mayor Matt Mahan and San Francisco Mayor Daniel Lurie
Sources: CalMatters voter guide; Ballotpedia; UC Berkeley IGS
Critical Policy Concerns
Capital Flight
Wealth taxes consistently drive high-net-worth individuals to relocate. Research from the OECD shows that countries with wealth taxes experience significant outmigration of taxable individuals, permanently reducing the tax base.
California is already experiencing this: Google co-founders Larry Page and Sergey Brin, along with Peter Thiel, have relocated their tax residency out of state.
Revenue Volatility
Wealth taxes create extreme revenue volatility because they tax net worth, which fluctuates dramatically with market conditions. A 20% market correction can eliminate billions in projected revenue, creating budget crises. The Legislative Analyst's Office estimates California already faces a structural deficit of $20–$35 billion annually through 2027-28.
The top 1% of taxpayers contribute nearly 40–50% of the state's personal income tax revenue. If they flee, the fiscal crater will dwarf any wealth tax revenue collected.
Constitutional Vulnerabilities
The retroactive nature of the tax and its attempt to tax individuals who have left the state raise serious constitutional questions under the Due Process Clause, the Commerce Clause, and Supreme Court precedent in Saenz v. Roe.
Legal challenges could tie up revenue for years while costing taxpayers millions in litigation.
Administrative Burden
Valuing illiquid assets like private companies, art collections, and real estate holdings is complex, expensive, and subject to extensive litigation. Administrative costs can consume 15-30% of revenue collected.
California would need to create an entirely new bureaucracy to value and audit billionaire assets.
Economic Impact
Wealth taxes reduce investment, entrepreneurship, and job creation. When billionaires relocate, they take their businesses, investments, and philanthropic activities with them, reducing economic activity and tax revenue from other sources.
International Failures
Twelve European countries implemented wealth taxes between 1990 and 2017. Eight have since repealed them, including France (2017), Sweden (2007), and Germany (1997), due to capital flight, low revenue yields, and administrative complexity.
No major economy has successfully maintained a wealth tax long-term.
Constitutional & Legal Vulnerabilities
Saenz v. Roe (1999)
The U.S. Supreme Court has affirmed the fundamental right of citizens to move between states without penalty. In Saenz v. Roe, the Court held that the Privileges and Immunities Clause protects the right to travel and establish residency in any state.
Attempting to tax individuals after they have left California may violate this constitutional right, as it effectively penalizes interstate migration.
Due Process & Retroactivity
The Due Process Clause requires fair notice before imposing tax obligations. Retroactive taxation of past residency for a tax that didn't exist at the time violates the principle of fair notice, creating significant legal risk.
Courts have consistently struck down retroactive taxes that lack a rational basis or violate fundamental fairness principles.
Dormant Commerce Clause
The measure taxes worldwide assets, not just California-based holdings. This creates potential violations of the Dormant Commerce Clause, which prohibits states from unduly burdening interstate commerce or discriminating against out-of-state economic activity.
Taxing assets located outside California may exceed the state's taxing authority and violate constitutional limits on state power.
Enforcement Challenges
Attempting to collect taxes from individuals who have left the state and established residency elsewhere would require complex interstate enforcement mechanisms, potentially violating the Full Faith and Credit Clause and creating years of litigation.
The state may be unable to collect from relocated billionaires, making revenue projections unreliable.
The Bottom Line
Multiple constitutional challenges could tie up this tax in courts for years, preventing any revenue collection while costing California taxpayers millions in legal fees. Even if the tax survives legal challenges, collection from individuals who have already left the state may prove impossible.
Economic Impact Analysis
Revenue Projections vs. Reality
Proponents' Estimate
$100 Billion
Official LAO ballot analysis: temporary tens of billions over several years; timing and totals are hard to predict because asset values move and taxpayers can leave or restructure.
Realistic Assessment
$20-40 Billion
Accounts for: Capital flight (Page, Brin, Thiel already exited), market volatility (-20% correction erases revenue), administrative costs (15-30% of revenue), collection difficulties
The Structural Deficit Reality
The LAO estimates California already faces a structural deficit of $20–$35 billion annually through 2027-28. The top 1% contribute nearly 40–50% of the state's personal income tax revenue. If they flee, the fiscal crater will be catastrophic.
Unintended Economic Consequences
Reduced Investment
Wealth taxes reduce the after-tax return on investments, discouraging capital formation and reducing economic growth. Studies show wealth taxes can reduce GDP growth by 0.2-0.3 percentage points annually.
Job Losses
When billionaires relocate, they take their businesses and investments with them. This reduces employment opportunities, particularly in high-paying sectors like technology, finance, and venture capital.
Lost Tax Revenue
Relocated billionaires no longer pay California income taxes, sales taxes, property taxes, or contribute to the state's economy. The lost revenue from other taxes may exceed the wealth tax revenue collected.
Innovation Impact
California's innovation economy depends on venture capital and entrepreneurial risk-taking. Wealth taxes reduce both, potentially harming the state's competitive advantage in technology and innovation.
The "Doom Loop" Precedent
San Francisco's Warning
In 2024, San Francisco voters passed Proposition M, which repealed the city's punitive "Overpaid Executive Tax." Even the most progressive electorate in the nation rejected symbolic inequality taxes when linked to economic degradation—empty storefronts, a budget deficit threatening public transit and sanitation, and businesses fleeing to Austin and Miami.
Initiative 25-0024, now Proposition 40, risks creating the same "Doom Loop" statewide: capital flight reduces the tax base, which forces spending cuts or new middle-class taxes, which drives more residents and businesses out. The Legislative Analyst's Office has explicitly warned that structural deficits require ongoing solutions, not one-time fixes, and that reliance on volatile revenue sources exacerbates the state's fiscal fragility.
⚠️ The "Budget Trap": Using a one-time wealth tax to fund permanent entitlement expansions (healthcare) guarantees a fiscal cliff when the money runs out—or when the wealth base flees.
Propositions 41 and 42
Two competing measures also qualified for the November 3, 2026 ballot. The LAO warns that if Proposition 41 or 42 receives more Yes votes than Proposition 40, courts could find a conflict and stop Prop 40 from becoming law even if a majority also votes Yes on 40.
Proposition 41
Limits new special taxes and measures that exclude new revenue from the state spending limit. Includes a conflict clause aimed at Prop 40's attempt to park wealth-tax money outside the Gann limit, Prop 98 school funding, and reserve rules.
Proposition 42
Would prohibit new taxes after January 1, 2026 on ownership or control of personal assets (including business interests and financial holdings) and restrict retroactive taxes based on status that existed before the tax took effect—directly targeting a wealth tax timed to January 1, 2026.
Sources: LAO Prop 40 analysis; Ballotpedia
Timeline
October 22, 2025
INITIATIVE FILED
Initiative 25-0024 ("2026 Billionaire Tax Act") filed by Jim Mangia and Suzanne Jimenez of SEIU-UHW.
November 26, 2025
AMENDMENT FILED
Amendment filed to shift the effective date from 2025 to 2026 to mitigate legal challenges regarding retroactivity.
December 2025
HIGH-PROFILE EXITS
Larry Page, Sergey Brin, and Peter Thiel exit California residency. Larry Page purchases $173 million in Miami real estate, signaling permanent departure. This represents hundreds of billions in wealth leaving the state.
December 26, 2025
CLEARED FOR SIGNATURES
Initiative cleared for signature gathering by the Secretary of State.
February 18, 2026
STATEWIDE RALLY PHASE
Supporters escalated organizing with high-profile statewide events while opposition committees expanded fundraising and competing ballot strategies.
April 27, 2026
1.5M+ SIGNATURES SUBMITTED
SEIU-UHW reported more than 1.5 million signatures submitted to county officials, far above the required threshold. County registrars then validated signatures ahead of statewide certification.
June 25, 2026
CERTIFIED FOR THE BALLOT
The Secretary of State certified the initiative for the November 3, 2026 General Election. It had been declared eligible on June 17 with a projected 980,438 valid signatures. A last-minute SEIU offer to swap the 5% initiative for a smaller legislative tax was rejected; the measure stayed on the ballot.
July 2026
NUMBERED PROPOSITION 40
The Secretary of State assigned ballot number 40 and published the official title and summary: a one-time tax of up to 5% on covered assets over $1 billion, with 90% for health care and 10% for food assistance or education, and an exemption from school-funding, reserve, and spending-limit rules.
August 2026
POLLING AND CAMPAIGN SPEND
A UC Berkeley IGS poll of likely voters found 48% Yes, 41% No, and 11% undecided. Support was 70% among Democrats and 80% opposed among Republicans. Campaign committees tied to Props 40, 41, and 42 had already raised more than $140 million combined, with high-profile Democratic and labor opposition including Gov. Newsom, the California Teachers Association, and Planned Parenthood Affiliates of California.
September 2026
STATEWIDE AD BLITZ
Opposition ads featuring Gov. Newsom, Xavier Becerra, and Steve Hilton hit TV and digital screens across California. Reporting put reserved opposition ads near $88 million through Election Day. Sergey Brin had given $82 million to Building a Better California, which had raised about $118 million. SEIU-UHW, which spent tens of millions to qualify the measure, said it would rely on grassroots organizing rather than matching the ad spend dollar for dollar.
November 3, 2026
VOTE NO ON PROPOSITION 40
California voters decide Proposition 40. Even if it passes, Propositions 41 or 42 can still block it if they receive more Yes votes. Capital flight and legal challenges would continue either way.
News Coverage
Recent Articles
Opposition Ads Hit the Airwaves
Spots featuring Newsom, Becerra, and Hilton began running statewide. AdImpact data pointed to about $88 million in reserved TV and digital ads; Building a Better California had raised about $118 million, including $82 million from Sergey Brin.
Official Proposition 40 Ballot Analysis
The Legislative Analyst's Office explains the one-time 5% tax, health-care earmarks, and fiscal effects: temporary tens of billions, plus possible ongoing income-tax losses if billionaires leave.
Voter Guide to Proposition 40
How Prop 40 works, who is for and against it, and why Props 41 and 42 can nullify it if they win more Yes votes.
Prop 40 Holds a Narrow Lead in August Poll
Likely voters: 48% Yes, 41% No, 11% undecided. Seventy percent of Democrats support it; 80% of Republicans oppose it. Gov. Newsom remains opposed.
Opposition Spending Escalates Against Prop 40
Teachers, firefighters, Planned Parenthood, and Newsom oppose the tax; competing measures 41 and 42 are designed to block it.
Measure Declared Eligible for November Ballot
June 17, 2026: random-sample verification projected 980,438 valid signatures, clearing the 874,641 threshold. Certification followed on June 25.
Signatures Submitted for One-Time Billionaire Tax Initiative
Ballotpedia tracks the post-submission phase and confirms the Secretary of State verification window now runs through June 25.
Billionaire Tax Gathers Enough Signatures for November Showdown
A recap of the late-April push and the expected high-spend campaign battle if the measure qualifies.
Wealth Tax Backers Report 1.5M Signatures
County registrars now validate signatures before final statewide certification.
Democratic Mayor of San Jose Opposes Billionaire Tax
San Jose Mayor Matt Mahan, a Democrat, has come out against the proposed ballot measure, warning it could harm California's innovation economy.
Newsom Dings Labor Leader, Dismisses Wealth Tax Push
Governor Newsom's response to the wealth tax initiative and his stance on the labor union's push for the measure.
Sergey Brin Joins Larry Page in Cutting California Ties Ahead of Billionaire Tax
Google co-founder Sergey Brin joins Larry Page in relocating business entities out of California as the wealth tax proposal gains momentum.
California Wealth Tax Threat Pushes Billionaires to Texas, Florida
Analysis of the accelerating billionaire exodus from California as the proposed wealth tax drives relocation to tax-friendly states.
San Jose Mayor Calls California's Proposed Billionaire Wealth Tax an "Incredible Risk"
San Jose Mayor Matt Mahan warns that the proposed billionaire tax poses significant risks to California's economy and innovation sector.
California Billionaire Exodus Accelerates as Newsom Pushes 5% Wealth Tax
Video coverage of the accelerating billionaire exodus from California as the proposed wealth tax sparks backlash and migration to red states.
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