No on Proposition 40
The 2026 Billionaire Tax Act
What is it?
Prop 40 is a one-time 5% tax on the net worth of California residents worth $1B or more, for the 2026 tax year only. It also taxes certain trusts a billionaire has put property into. All persons who were residents of California as of January 1, 2026 are subject to the tax.
The tax phases in at net worths between $1B and $1.1B, and applies to the entire net worth so it is not a progressive tax. A married couple counts as one person.
Every California resident filing a 2026 state tax return must declare that their net assets were $1B or less, or else file the wealth tax forms.
What counts as net worth
Everything the taxpayer and their spouse own worldwide, minus debts, except real estate, retirement accounts, up to $5M of art, or other property outside California, unless moved to dodge the tax.
Where the money goes
Revenue goes into a new fund held outside the General Fund, exempt from the state spending limit. It is split 90% to health care (Medi-Cal and other coverage for low- and moderate-income people) and 10% to K-14 education and food assistance (CalFresh and school meals).
Read the full annotated legal text →
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The tax can be paid at once or over five years, with a 7.5% yearly charge on the unpaid balance. The money cannot replace existing spending on the funded programs. A taxpayer whose bill exceeds all their publicly traded assets can defer by pledging hard-to-sell assets to the state under a contract that binds them after leaving California. Facial challenges must be filed within 60 days of the election, with appeal straight to the California Supreme Court.
Fiscal impacts
The measure's findings say California has around 200 billionaires with roughly $2 trillion in combined wealth; the legal text contains no revenue estimate. In its final analysis for the state voter guide, the Legislative Analyst's Office estimates a temporary revenue increase of tens of billions of dollars spread over several years, and warns that when and how much is very hard to predict. It expects a possible ongoing decrease of less than $1B per year in state income tax revenue as billionaires respond, some by leaving California, and puts administrative costs at tens of millions of dollars per year for several years, paid from the wealth tax itself.
Why is this on the ballot?
This is a citizen initiative, filed with the Attorney General as Initiative No. 25-0024 and qualified by voter signatures. It amends both the Constitution and the Revenue and Taxation Code.
According to Article II, Section 8 of the California Constitution, amendments to the California Constitution may be introduced by collecting signatures (8% of the votes cast in the most recent Governor's race). The amendment must then be approved by voters with a simple majority of 50% + 1.
- Placed on ballot by: Voter signature petition.
- Sponsor: SEIU United Healthcare Workers West (SEIU-UHW), the labor union that filed and funded the measure.
- Proponent: Suzanne Jimenez, chief of staff at SEIU-UHW.
Why vote No?
Prop 40 is a one-time tax collected to fund programs that run forever, and the money is smaller and less certain than the campaign claims. The Legislative Analyst's Office expects tens of billions of dollars, not the campaign's $100B, plus an ongoing loss of income tax revenue of up to $1B per year as wealthy taxpayers leave. Six billionaires already left before the residency date arrived, taking an estimated $27B of the projected haul with them along with the yearly income taxes we no longer get. The federal Medicaid cuts are real and hospitals do need the money, which is exactly why they need money that will actually arrive.
The money may also show up late or never. No state has taxed net worth this way, and the measure schedules its own court fight to run into late 2027. A clinic cannot make payroll with revenue that is tied up in court.
You do not have to take our word for it. The California Teachers Association, Planned Parenthood, the California Medical Association, and the state's hospitals, the groups this money is supposed to rescue, oppose it, and so does Governor Newsom. This same ballot carries a durable alternative we endorse: Prop 3, which keeps the existing tax rates on high earners. Fund health care with money that shows up. Vote no on Prop 40, and yes on Prop 3.