Proposition 40, also known as the California billionaire tax or California wealth tax, is a combined initiated constitutional amendment and state statute appearing on the November 3, 2026, ballot in the state of California.
If approved by voters, the state's billionaires would pay a one-time 5 percent tax on their accumulated wealth. Revenue from the tax would primarily fund state healthcare programs, with a smaller portion going toward food assistance and public education. Proposition 40 was sponsored by the labor union SEIU United Healthcare Workers West.
Background Proposition 40 was drafted by tax law professors Brian Galle of UC Berkeley, David Gamage of the University of Missouri, Darien Shanske of UC Davis, and economist Emmanuel Saez of UC Berkeley. Labor union SEIU United Healthcare Workers West (SEIU-UHW) filed the initiative. In December 2025, state attorney general Rob Bonta issued the official title and summary.
On April 26, 2026, SEIU-UHW announced that they had collected 1.6 million signatures in support of the tax, nearly double the 874,641 required to qualify for the November ballot. On June 17, the California secretary of state announced that the wealth tax had qualified for the ballot with 980,438 valid signatures.
A day later, SEIU-UHW sent a letter to California governor Gavin Newsom—an opponent of the initiative—offering to withdraw the 5% wealth tax proposal if Newsom supported a smaller 2% levy on billionaires that would be passed by the state legislature; Newsom quickly rejected the amended proposal. Negotiations stalled before the June 25 withdrawal deadline, and the initiative was certified for the November ballot.
Impact The initiative would impose the Billionaire Tax Act, a one-time 5% tax on the net worth of the California residents worth over $1billion. 90% of revenue from the tax would go towards state-funded healthcare programs, including Medi-Cal, while the rest would provide funding for food assistance and public education.
The eligibility cut-off outlined in the initiative was January 1, 2026, meaning that if the initiative is passed by voters, billionaires who continued to hold residence in the state of California after that date will be subject to the 5% tax. Seven of the state's estimated 214 billionaires were reported to have left California before or around the deadline, including PayPal co-founder Peter Thiel, former Uber CEO Travis Kalanick, and Google co-founders Larry Page and Sergey Brin. They may be subject to a residency audit to determine whether they have sufficiently severed ties with the state.
Revenue Analysis by the California Legislative Analyst's Office found the wealth tax was likely to temporarily increase revenue by up to tens of billions of dollars total, collected over several years. The analysis also found the tax would possibly decrease income tax revenue by less than $1 billion annually from billionaires leaving California.
SEIU-UHW, the labor union behind the initiative, estimated that the tax would generate $100 billion, though revenue from the billionaires who reportedly left the state prior to the deadline accounts for an estimated $29billion of that sum, according to Fortune. Academic Kent Smetters cast doubt on SEIU-UHW's estimate, telling the Los Angeles Times that the union is "not accounting for the different ways that people can move or reclassify wealth". UC Berkeley economics professor Enrico Moretti warned that the tax "has the potential to completely destroy California's economy", and described the revenue estimate as "way overly optimistic."
The conservative-leaning Hoover Institution estimated that "permanent loss of income taxes from the departing residents indicates a high likelihood that net effect of the Billionaire Tax Act will be negative" by almost $25 billion. This conclusion was criticized by one of the bill's authors, David Gamage, who contended that the group's analysis "suggests that the billionaire tax might raise more revenue than our projections even say".
In a guest essay for The New York Times, Gabriel Zucman and initiative co-author Saez responded to concerns about billionaires fleeing the state, claiming that because billionaires are able to avoid income tax on most earnings, "even if all of them left the state, it would take 25 years for the loss of their tax payments... to surpass the amount the state would raise" if the initiative passes.
Economist Teresa Ghilarducci of the Economic Policy Institute, a pro-union think tank, considered an exodus of billionaires due to the tax unlikely, pointing to a 2022 Massachusetts 4% surtax on income above $1million that exceeded projected revenue. Nuveen, an asset management company, also concluded billionaire outmigration was unlikely and that the tax posed minimal risk to California's credit profile and municipal bonds.
Effective tax rate The Tax Foundation, a center-right think tank, argued that it was possible for the effective wealth tax rate to far exceed 5% for some taxpayers due to provisions related to dual-class share structures, but acknowledged that this would be unlikely in cases where valuations are clearly incorrect. The initiative's drafters published a report arguing that this concern was based on a misreading of the text.
Real estate Forbes cited the billionaire tax initiative as the reason for a real estate boom on Nevada's side of Lake Tahoe, noting that a number of lakefront homes were purchased by California billionaires after the proposal was announced. Bill Dietz, a Lake Tahoe realtor, told the magazine that a "clear acceleration of ultra-high-net-worth buyers moving from California to Nevada" took place, driven by "tax strategy".
In late 2025, Oracle founder Larry Ellison sold his San Francisco mansion for $45 million, choosing to relocate to Nevada; venture capitalist Steve Jurvetson later did the same. In June 2026, former U.S. ambassador to Kenya Meg Whitman and her husband, neurosurgeon Griffith R. Harsh, sold a number of properties in California, including a $17.9 million fly fishing ranch, purportedly over fears that the billionaire tax would be approved by voters.
Campaign Support
U.S. senator Bernie Sanders, a democratic socialist, has endorsed the billionaire tax. At a February 2026 Los Angeles rally in support of the tax, Sanders described billionaires as "oligarchs of the 18th century...[who] believe they have the divine right to rule". Many prominent supporters have asserted that the billionaire tax is a necessary response to the Trump administration's restrictions and cuts to Medicaid, including former U.S. secretary of labor Robert Reich, who described the tax as a "practical way to keep the healthcare system functioning".
The state branch of the Democratic Socialists of America endorsed the billionaire tax, stating that "without this funding, thousands of jobs will be lost, millions of Californians could lose coverage altogether, and care facilities across the state could be forced to close".
U.S. representative Ro Khanna, a progressive Democrat who represents much of the Silicon Valley, has expressed strong support for the tax. Some venture capitalists from Khanna's district responded by backing his unsuccessful primary challenger, Ethan Agarwal. Two 2026 Democratic gubernatorial candidates, billionaire businessman Tom Steyer and state superintendent of public instruction Tony Thurmond, endorsed the tax.
Current Affairs editor Alex Scopic argued in favor of the tax, considering it an important method of countering the "buy, borrow, die" tax avoidance strategy by billionaires. Emmanuel Saez, a co-author of the initiative, said that the tax would "preserve [healthcare and education] programs that are crucial for California's economy".
In August 2026, the California Democratic Party endorsed Proposition 40. After a failed initial endorsement vote and an unsuccessful alternative motion to adopt a neutral position on the measure, a second endorsement vote yielded 61.7 percent in favor, narrowly exceeding the 60 percent threshold for endorsement.
In September 2026, a group of six progressive Nobel laureates of economics published a letter in support of the tax, arguing that it would help address growing inequality in California and loopholes that have allowed billionaires to avoid taxes on capital gains. The economists wrote that if California passed Proposition 40, it would "kickstart a movement" to tax ultra-high-net-worth individuals elsewhere.
SEIU-UHW extortion and abuse allegations In February 2026, SEIU United Service Workers West (SEIU-USWW) president David Huerta and three other labor leaders filed a formal complaint against SEIU-UHW president Dave Regan, accusing him of extorting them by suggesting that he would "report unspecified governance concerns to the U.S. Department of Labor ... if [they] did not support the billionaire tax". An investigation initiated by the SEIU's national branch substantiated these claims as well as allegations from SEIU California executive director Tia Orr that Regan had threatened her by telling her to "endorse this measure ... or I'm coming for you".
A September 2026 report from SEIU California found that Regan had "engaged in a pattern of subjecting former and current SEIU California female directors to intimidating and threatening physical behavior" and substantiated former union leader Courtni Pugh's allegations that Regan physically assaulted her. Regan denied this and claimed that because Pugh worked as a political consultant against the tax, she had a reason to lie. A separate investigation found that Regan had intimidated and bullied SEIU California's government relations director, Jessica Bartholow, by standing "uncomfortably close" to her as "tensions flared over the billionaire tax" before "scream[ing] an expletive at her".
Regan dismissed the allegations as political retaliation over his support for the billionaire tax; an independent investigation found that his claims were unsubstantiated. On September 11, 2026, the California Nurses Association, who support Proposition 40, published a statement urging Regan to resign over "inappropriate, aggressive behavior and threats targeting other labor staff to support the Prop. 40 billionaire tax initiative."
Opposition California governor Gavin Newsom has vocally opposed the tax, telling Politico that the proposal "makes no sense" and is "really damaging to the state". A number of Democratic candidates who aimed to succeed Newsom in the 2026 gubernatorial election also opposed the tax, including former U.S. representative Katie Porter, former U.S. secretary of health and human services Xavier Becerra, former Los Angeles mayor Antonio Villaraigosa, and San Jose mayor Matt Mahan. Republican candidates Chad Bianco and Steve Hilton expressed opposition to the tax.
Ayn Rand Institute associate fellow Robertas Bakula argued in the Los Angeles Daily News that Proposition 40's eligibility deadline of January 1, 2026, is illegal due to a constitutional ban on retroactive laws. In a February 2026 effort to curb the effects of the eligibility deadline, U.S. representative Kevin Kiley introduced a bill in Congress that would prohibit a state from levying a tax retroactively on people who no longer live in the state.