California Billionaire Tax Faces Fierce Opposition from Democrats and Wealthy

A unique California ballot measure, Proposition 40, which proposes a one-time 5% tax on the net worth of billionaires, is facing significant opposition from a diverse coalition including top Democratic figures and the very wealthiest individuals it targets. This measure, which seeks to raise revenue to replace federal funding cuts to healthcare, has spurred one of the most expensive ballot fights in the state's history.

Opponents have raised over $300 million to fight the measure, with a substantial portion contributed by Google co-founder Sergey Brin. Among the prominent Democrats aligning against Proposition 40 are Governor Gavin Newsom, Planned Parenthood, and the California Teachers Association, joined by most Republicans. Their primary concern is that such a tax could drive wealthy individuals and their associated tax revenue out of California, potentially exacerbating budget issues.

Governor Newsom, while considering a presidential bid, has largely opposed tax increases during his tenure. He has advocated for a national tax on billionaires, arguing that a single-state proposal is ineffective and could harm California's financial standing. Despite his stance, the state Democratic Party's executive board has endorsed the measure.

Supporters of the proposition, including some labor unions, California Representative Ro Khanna, and Senator Bernie Sanders, have raised considerably less money, about $32.4 million. The "yes" campaign is relying on Sanders' influence among progressives to make their case before the November 3 voting deadline. Sanders has framed the vote as a question of whether society is destined to be controlled by a few of the wealthiest individuals.

Proposition 40 is distinct from a continuous wealth tax, as it would impose a one-time levy on the net worth of Californians exceeding $1 billion. The revenue generated would primarily fund healthcare, with the remainder allocated to education and food assistance programs. According to the nonpartisan Legislative Analyst’s Office, a few hundred billionaires reside in California.

Polling from the Public Policy Institute of California in September indicated a divided electorate, with 52% of likely voters supporting the measure and 46% opposing it. As mail ballots are distributed, opponents have intensified their campaign, with ad spending significantly outpacing that of the supporters.

Concerns are mounting that the proposal may already be prompting wealthy individuals to leave the state. California's budget heavily relies on its top 1% of earners, who contribute nearly half of the state's personal income tax revenue. Jodi Hicks, CEO of Planned Parenthood's California chapter, stated that while they do not oppose the concept of a wealth tax, they believe this specific proposal is flawed and could cause more harm than good.

Some tech moguls, including Sergey Brin and Larry Page, have reportedly begun distancing themselves from the state in anticipation of the tax, which would apply to billionaires residing in California as of January 1, 2026. Billionaires such as Brin, venture capitalist John Doerr, and former Google CEO Eric Schmidt have contributed millions to a committee opposing the tax.

Arguments against the measure, funded by opponents, suggest it could lead to long-term revenue loss for California and necessitate cuts to hospital and clinic funding. Conversely, proponents, like the SEIU United Healthcare Workers West union, argue the tax is essential to offset an estimated $100 billion in federal healthcare funding cuts over five years. They have countered opposition ads by highlighting the potential impact on hospital emergency room visits for children.

The debate has become more contentious following accusations of harassment and threats against female colleagues and other union leaders leveled against Dave Regan, the SEIU UHW President and a key proponent of the measure. Regan has dismissed these allegations as a distraction.

Sociology professor Cristobal Young noted that previous tax increases on millionaires in California did not result in a mass exodus of wealthy individuals, suggesting that these high-income earners are generally content. However, he characterized the current proposal as poorly designed and advocated for broader tax code reforms to prevent wealthy individuals from shielding their assets.