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California billionaire tax: who pays Prop 40's one-time 5% levy

Voters decide on November 3 whether billionaires who lived in California on January 1, 2026 must pay 5% of their net worth once. The LAO says 90% of the money would go to public health care, and rival Props 41 and 42 could cancel it.

By Rowan Ashby Published 24.10.26 07:15 UTC 7 min read

Official 2026 portrait of California Governor Gavin Newsom, who opposes the Prop 40 billionaire tax — Charles Ommanney, Office of the Governor of California / Wikimedia Commons / Public domain · Source

Key takeaways

Proposition 40 would charge California billionaires a one-time tax of 5% of their net worth if they lived in the state on January 1, 2026.
Supporters led by the healthcare workers union SEIU-UHW say it would raise about $100 billion. The state's Legislative Analyst's Office (LAO) estimates "tens of billions of dollars" over several years.
Under the LAO analysis, 90% of the money would go to public health care, and the other 10% would go to education, food assistance and running the tax.
Governor Gavin Newsom opposes the measure. Two competing measures, Propositions 41 and 42, are funded largely by a group backed by Google co-founder Sergey Brin, and either one could block Prop 40 if it gets more yes votes.
Recent polls point to a close race ahead of the November 3, 2026 vote.

The California billionaire tax, Proposition 40, would charge billionaires who lived in the state on January 1, 2026 a one-time 5% levy on their net worth. Voters decide on November 3. Governor Gavin Newsom opposes it, and recent polls point to a close race.

The California billionaire tax appears on the ballot as Proposition 40, officially the "One-Time Wealth Tax for State-Funded Health Care Programs Initiative." This guide covers who would pay, how much, where the money would go, what each side argues, and what happens if voters also approve the measures written to cancel it.

What is the California billionaire tax (Prop 40)?

Prop 40 is a citizen initiative filed by SEIU United Healthcare Workers West (SEIU-UHW). It was drafted by tax law professors and economists including Emmanuel Saez of UC Berkeley. Attorney General Rob Bonta issued its title and summary in December 2025. SEIU-UHW said in April 2026 that it had collected 1.6 million signatures, well above the 874,641 needed. On June 25, 2026, the measure was certified for the ballot after the deadline to withdraw it passed without a deal with Newsom.

The union presents the tax as a short-term answer to federal health care cuts. Suzanne Jimenez of SEIU-UHW described it to the BBC as a "short-term solution" to the loss of federal funding. Supporters cite the reductions to Medi-Cal, California's Medicaid program, under the federal One Big Beautiful Bill Act.

Who would pay, and how much?

According to the LAO's official ballot analysis, the tax applies to billionaires who were California residents on January 1, 2026. Net worth means what a person owns, such as stocks, businesses and investments, minus their debts. Real estate, pensions and retirement accounts are generally excluded.

The Hoover Institution's ballot guide adds some details from the measure's text:

The 5% applies to a taxpayer's whole fortune, not only the portion above $1 billion. The rate phases in between $1.0 billion and $1.1 billion, so a person worth $1.1 billion would owe at least $55 million.
A married couple counts as a single taxpayer.
Residency is fixed at January 1, 2026, and net worth is measured on December 31, 2026. That means a billionaire who moved away during 2026 could still owe the tax.
Private businesses are valued with a formula based on book value and average profits, which critics argue could overstate some holdings.

Taxpayers can spread the payment over five years, but they pay more to do so, according to the LAO. As an example, NBC Bay Area estimated that Meta chief executive Mark Zuckerberg would owe roughly $10 billion on a net worth of about $200 billion.

Provision	What Prop 40 says	Source
Who pays	California residents worth $1 billion or more on January 1, 2026	LAO
Rate	One-time 5% of total net worth (phased in from $1.0bn to $1.1bn)	LAO; Hoover Institution
Excluded assets	Real estate, pensions, retirement accounts (generally)	LAO
Due date	2027, with an optional five-year payment plan at extra cost	LAO
Use of money	90% public health care; 10% education, food assistance, administration	LAO
Revenue claim	About $100 billion (proponents)	SEIU-UHW via BBC; Hoover Institution
Official revenue estimate	Tens of billions of dollars over several years; possible income tax loss of under $1 billion a year	LAO
Administration cost	Tens of millions of dollars a year for several years, paid from the new revenue	LAO

How much money would Prop 40 raise?

This is the most disputed question in the campaign. Supporters put the total at about $100 billion. The LAO, California's nonpartisan fiscal adviser, does not give a single figure. It says the state "probably would collect tens of billions of dollars" spread over several years, and calls the amount and timing very hard to predict because billionaires may act to reduce what they owe and because stock-linked wealth changes constantly.

The LAO also warns that billionaires could leave or cut their California income tax payments, which could lower state revenue by less than $1 billion a year. The Hoover Institution, which argues against the measure, estimates about $40 billion before behavioural effects and a net long-run loss of at least $25 billion once lost income tax is counted. Economists Emmanuel Saez and Gabriel Zucman, who back the tax, have argued that even if every billionaire left, it would take about 25 years for lost income tax to exceed what the levy brings in.

Departures are already part of the debate. The BBC reports that at least six billionaires, including Larry Page, Sergey Brin, Peter Thiel and Travis Kalanick, have reportedly left California. The Hoover guide estimates that those who left before January 1 took about $536 billion out of the tax base.

Arguments for and against Prop 40

The case for

Health care funding: SEIU-UHW and other backers say the money would protect Medi-Cal and other services from federal cuts.
Wealth concentration: Supporters including Senator Bernie Sanders, Representative Ro Khanna and Tom Steyer argue that the very richest should contribute more. Steyer told the BBC he finds parts of the drafting "problematic" but sees the tax as necessary.
Party backing: The California Democratic Party endorsed Prop 40 in August 2026 with 61.7% of delegates, just above its 60% threshold. The California Labor Federation and the California Nurses Association also support it.

The case against

Flight and lost income tax: Newsom has warned that the tax could drive wealthy residents out of the state and reduce income tax revenue, according to the BBC.
Legality: Critics argue that the January 1, 2026 residency date is retroactive and could face court challenges that delay collection.
Timing mismatch: The Hoover guide notes that about two-thirds of the federal Medi-Cal reductions fall after 2030, while one-time revenue may run out sooner.
Broad opposition: Opponents include several candidates for governor from both parties, the California Teachers Association, the California Medical Association and Planned Parenthood.

Props 41 and 42: what happens if they pass too?

Two competing measures on the same ballot could stop Prop 40 even if it wins. Both are backed by Building a Better California, a group funded by billionaires including Sergey Brin.

Proposition 41 would ban new state taxes whose revenue is exempt from the state spending limit, as Prop 40's revenue would be. It would also require State Auditor reviews of new special taxes.
Proposition 42 would ban new state taxes on owning financial assets, such as stocks, and on other personal property. It would also limit taxes that apply to past events.

The LAO says that if either Prop 41 or Prop 42 gets more yes votes than Prop 40, courts could find the measures in conflict, and Prop 40 could be blocked even with majority support. A voter who wants Prop 40 to take effect therefore has to look at all three measures, not only the billionaire tax itself.

Polls and campaign money

Polling has tightened. A September Berkeley IGS/Los Angeles Times survey found 45% of likely voters in favour, 42% against and 13% undecided, according to the BBC. The Public Policy Institute of California's September survey of 1,103 likely voters found 52% yes and 46% no, which CalMatters described as a statistical tie. In the same PPIC survey, 51% backed Prop 41 and 54% backed Prop 42.

Poll	Field period	Yes	No	Undecided
Berkeley IGS / Los Angeles Times	September 2026	45%	42%	13%
PPIC Statewide Survey	September 4–10, 2026	52%	46%	n/a

The money is lopsided. CalMatters reported in September that Building a Better California had spent more than $187 million against Prop 40 and in support of Props 41 and 42, including more than $56 million for the "No on Prop. 40" committee. SEIU-UHW had raised about $31 million to pass the measure.

What it means

If Prop 40 passes and neither competing measure outpolls it, California would become the first US state to tax billionaires on their net worth. Payments would be due in 2027, and critics have signalled legal challenges. Its effect on the budget would depend on how many billionaires stay, how assets are valued, and how courts treat the residency date. Backers themselves describe it as a short-term fix rather than a permanent source of health care funding.

If Prop 40 fails, or a rival measure gets more votes, the result would also matter beyond California. Prop 42 in particular would make future wealth taxes harder to pass in the state's constitution. For more on how the measure is already shaping corporate decisions, see our report on Meta's residency deal with Mark Zuckerberg and the related new non-voting Meta share class. For the national picture on the same ballot day, read how No Kings protests turned to early voting before the November 3 midterms.

Frequently asked questions

Who would pay the California billionaire tax?

According to the Legislative Analyst's Office, Proposition 40 applies to people worth $1 billion or more who were California residents on January 1, 2026. Real estate, pensions and retirement accounts are generally excluded from net worth.

How much is the Prop 40 tax?

It is a one-time tax of 5% of total net worth, due in 2027. Taxpayers can spread payments over five years but pay more to do so. The Hoover Institution notes the rate phases in between $1.0 billion and $1.1 billion.

Where would the Prop 40 money go?

The LAO says 90% must go to public health care services and the remaining 10% to education, food assistance and administering the tax.

What happens if Prop 40 and Prop 41 or 42 both pass?

The LAO says that if Proposition 41 or 42 receives more yes votes than Proposition 40, courts could find the measures in conflict and Prop 40 could be blocked even if it wins a majority.