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California voters were leaning against a proposed one-time tax on billionaires, with Proposition 40 trailing as election officials continued counting ballots.
As of Wednesday afternoon, the measure had received 44.4 percent of the vote, compared with 55.6 percent opposed, with approximately 60 percent of votes counted.
Even as Proposition 40 appeared headed for defeat, its backers were already looking ahead to another fight. The Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which sponsored the measure, told Newsweek that it could return to the ballot in 2028.
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“If Sacramento fails to protect patients and deliver a real solution that makes billionaires pay their fair share, healthcare workers will pursue every available avenue, up to and including returning to the ballot in 2028 with a billionaire tax,” Suzanne Jimenez, SEIU-UHW's chief of staff, said in a statement Wednesday.
The first-of-its-kind wealth tax would impose a one-time levy of 5 percent on Californians whose net worth exceeds $1 billion.
The proposal has divided prominent Democrats and drawn fierce opposition from California's wealthy tech sector. Google co-founder Sergey Brin has poured $102 million into Building a Better California, a political spending group leading the effort to defeat Proposition 40 and advance two competing ballot measures, Propositions 41 and 42.
A spokesperson for Building a Better California said the coalition opposing Proposition 40 reflects concerns about its potential impact on the state's public services and economy.
“It’s rare for such a broad coalition to unite around any single cause in California, but it reflects the potentially devastating impact of this measure on healthcare, education, and our state’s economy,” a group spokesperson previously said in a statement. “The impact of Prop 40 is clear: it will create a permanent hole in the state budget.”
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What Is California Proposition 40?
Proposition 40, also known as the Billionaire Tax Act, is a proposed one-time tax on the wealth of California residents whose net worth exceeds $1 billion.
The measure was sponsored by SEIU-UHW, which argued that the tax would help California offset anticipated federal healthcare funding cuts and protect services for residents.
The proposal became one of the most contentious measures on California's 2026 ballot, dividing Democrats and drawing significant opposition from business groups, technology executives and some traditional Democratic allies.
Supporters, including independent Vermont U.S. Senator Bernie Sanders, argued that the wealthiest Californians should contribute more to help fund public services, calling Prop 40 the "most important ballot measure in America."
Democratic Governor Gavin Newsom opposed the proposal, warning that taxing billionaires at the state level could encourage wealthy residents to leave California.
How Would California’s Billionaire Tax Work?
Unlike an annual wealth tax, Proposition 40 would impose a one-time levy on an individual's net worth, including financial assets such as stocks, bonds and other interests in property, according to the text of the proposed amendment.
The tax would be due in 2027, with taxpayers allowed to spread payments over five years, although doing so would require them to pay more, according to the Legislative Analyst's Office (LAO).
Supporters have estimated the tax could generate approximately $100 billion over five years, although estimates vary. The LAO estimates the measure could generate tens of billions of dollars in revenue. If some billionaires leave California, the state could lose less than $1 billion annually in income tax revenue.
Under the proposal, 90 percent of the revenue would go toward healthcare services, while the remaining 10 percent would fund education, food assistance and administration of the tax.
Who Would Pay the Billionaire Tax?
The tax would apply to billionaires who were California residents on January 1, 2026, and whose net worth exceeded $1 billion. As Newsweek previously reported, the measure was expected to affect approximately 200 people.
The residency cutoff became a point of contention as several prominent billionaires took steps to move their residences or business assets out of California ahead of the deadline.
Brin, for example, registered to vote in Nevada in December 2025, according to state records reported by Forbes, after purchasing a $42 million home on the Nevada side of Lake Tahoe.
However, tax experts have questioned whether relocating before the January 1 cutoff would necessarily exempt someone from the tax.
When Would Proposition 40 Take Effect?
If approved and enacted, the tax would be due in 2027. Taxpayers could spread payments over five years, although doing so would require them to pay more, according to the LAO.
The measure could still face legal challenges over its retroactive application and residency requirements, potentially delaying implementation.
Could California’s Billionaire Tax Still Be Blocked?
Winning a majority of votes would not necessarily guarantee Proposition 40 takes effect. Propositions 41 and 42, also on the ballot, contain provisions that could conflict with the billionaire tax.
Proposition 41 would prohibit new state taxes that exclude their revenue from the state's spending limit and require audits of certain programs funded by new or increased special taxes. Proposition 42 would prohibit new taxes on the ownership of financial assets and other personal property, as well as limit certain retroactive taxes.
If either Proposition 41 or Proposition 42 receives more yes votes than Proposition 40, the billionaire tax could be stopped from becoming law, even if Prop 40 wins a majority. The LAO says courts could find that the measures conflict.
Lorena Gonzalez, president of the California Federation of Labor Unions, said that Prop 40 will likely “come up short."
“Many who opposed it insist they’re for taxing billionaires more, just not this way,” Gonzalez posted on X Wednesday. “Thanks for saying so! We look forward to working with you on bold state & national proposals to unf*** the economy & take on the obscene concentration of wealth.”
Newsweek’s reporters and editors used Martyn, our AI assistant, to produce this story. Learn more about Martyn here. Contact Newsweek editors on this story: Kate Nalepinski and Edward T. Cummins
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