California voters are set to decide in November whether the state should impose a one-time wealth tax on billionaires under Proposition 40, a measure that could generate tens of billions of dollars for healthcare and other public programmes while intensifying a wider debate over taxation, wealth and the state’s economy.
The proposed measure would impose a one-time tax of 5% on the net worth of people who were California residents on January 1, 2026 and whose assets exceeded $1 billion. Unlike conventional income taxes, the levy would be based on wealth, including assets such as shares, businesses and other investments. Real estate, pensions and certain retirement accounts would generally be excluded.
According to California’s Legislative Analyst’s Office, the tax would be due in 2027, although taxpayers would have the option of spreading their payments over five years, subject to additional costs. The state estimates that the measure could bring in tens of billions of dollars over several years. Supporters of Proposition 40, however, have projected that it could generate around $100 billion over five years.
The money raised would largely be directed towards healthcare. Under the proposal, 90% of the proceeds would have to be used for healthcare services, while the remaining funds would go towards education, food assistance and administrative costs associated with collecting the tax. The revenue would also be exempt from some existing constitutional spending restrictions.
The initiative comes amid concerns over healthcare funding in California following reductions in federal support for Medicaid, known as Medi-Cal in the state. Supporters, including the Service Employees International Union-United Healthcare Workers West, argue that additional revenue is needed to protect healthcare services and other programmes that benefit low-income residents.
The proposal has also attracted strong opposition from business groups and some healthcare organisations. Critics argue that imposing a large one-time tax on the wealth of billionaires could encourage some of them to leave California or alter their financial arrangements, potentially reducing future income-tax revenue and investment in the state. The Legislative Analyst’s Office has acknowledged that some billionaires could respond by leaving California or changing their financial behaviour, potentially reducing state income-tax collections by less than $1 billion annually.
The measure has become particularly significant because California is home to hundreds of billionaires, many of whom accumulated their fortunes through technology companies and other businesses based in the state. Recent estimates have put the number of billionaires living in California at around 250, with their combined wealth exceeding $2 trillion.
The campaign surrounding Proposition 40 has also drawn substantial financial contributions from wealthy opponents. Google co-founder Sergey Brin and other billionaires have provided major funding to groups opposing the measure and supporting alternative ballot initiatives. Proposition 41 and Proposition 42 are particularly relevant because provisions in those measures could effectively nullify Proposition 40 if they receive more votes.
Supporters and opponents also differ sharply over how much money the tax would ultimately generate. Backers have cited a potential $100 billion windfall, while critics have estimated substantially lower collections, arguing that changes in residency, asset valuations and financial behaviour could reduce the amount collected. Reuters reported that some estimates place potential revenue closer to $40 billion.
Proposition 40 is scheduled to appear on California’s November 3, 2026 general-election ballot. If approved, the measure would represent a significant departure from traditional state taxation by applying a one-time levy directly to the accumulated wealth of billionaires rather than their annual income. The proposal therefore places California at the centre of a broader US debate over whether governments should tax accumulated wealth to finance public services and how such taxes could affect investment, migration and future tax revenues.
