California voters have rejected Proposition 40, a ballot measure that would have imposed a 5% tax on the assets of state residents with net worths exceeding $1.1 billion, with a smaller phased-in option for those worth between $1 billion and $1.1 billion [1]. The measure would have required California to spend 90% of the generated revenue on healthcare and would have applied retroactively to anyone living in the state as of January 1, 2026 [1]. This rejection represents a significant defeat for progressive advocates who championed the proposal, as Proposition 40 would have been the first enactment of a billionaire tax in the U.S. [1].
The ballot initiative sharply divided Democrats both within California and nationally, with notable opposition from outgoing Governor Gavin Newsom and gubernatorial candidate Xavier Becerra, as well as many of California's largest unions and Democratic-aligned advocacy groups [1]. Critics from both parties argued that the tax would prompt wealthy Californians to relocate, thereby drying up broader tax revenue streams and creating additional budget problems [1]. Interestingly, many progressives who generally support higher taxes on the wealthy opposed this specific measure because it was a one-time tax rather than a permanent one and primarily benefited a single policy area [1].
Opponents of Proposition 40 maintained a commanding advantage in campaign spending, outspending supporters 250 to 1 on advertisements in late October, according to ad-tracking firm AdImpact [1]. The opposition coalition, branded "No on Prop. 40," included the California Teachers Association, the California Medical Association, and Planned Parenthood, and received contributions from several billionaires including Google co-founder Sergey Brin [1]. Notable supporters of the measure included Senator Bernie Sanders and Representative Ro Khanna, both potential 2028 presidential contenders, who held several rallies in the state ahead of Election Day [1]. Additionally, opponents placed two competing ballot measures—Proposition 41 and Proposition 42—on California's ballot that would have effectively nullified Proposition 40 [1].
CONCLUSION
The rejection of Proposition 40 marks a significant political victory for wealthy interests and represents a setback for the progressive tax agenda in California. The measure's defeat, despite support from prominent progressive figures, demonstrates the substantial influence of well-funded opposition campaigns and suggests growing skepticism among voters—including some progressives—regarding one-time, narrowly-focused tax measures on the ultra-wealthy.