Prop 40 would tax California’s billionaires once; Here’s what it does and who’s for and against it
PALM SPRINGS, Calif. (KESQ) Proposition 40 would charge California’s billionaires a one-time tax equal to 5% of their net worth, and the fight over it has drawn more than $130 million in campaign money.
The tax would apply to anyone worth more than $1 billion who was a California resident on Jan. 1, 2026. It would be due in 2027, with an option to spread payments over five years at a higher cost.
Real estate, pensions and retirement accounts generally would not count, according to the nonpartisan Legislative Analyst’s Office, which says the state is home to a few hundred billionaires.
The analyst estimates the tax would bring in tens of billions of dollars spread over several years, but says the exact amount is hard to predict because stock prices move and billionaires could take steps to lower what they owe. Under the measure, 90% of the money must go to health care. The rest would go to education, food assistance and the cost of collecting the tax.
The analyst also warns some billionaires could leave the state or otherwise cut their income tax payments. It puts that possible loss at less than $1 billion a year.
Service Employees International Union-United Healthcare Workers West put the measure on the ballot. Supporters say the money would help cover federal cuts to Medi-Cal. “Massive federal cuts could push our hospitals and ERs past the breaking point,” a health care worker and Air Force veteran says in a Yes on 40 ad. “A billionaire tax can help keep hospitals open.”
Gov. Gavin Newsom opposes the measure, as do Xavier Becerra and Steve Hilton, the two candidates running to replace him. Doctors’ groups, the California Teachers Association and Planned Parenthood are also against it. The opposition argues the tax will drive billionaires out of California. “Studies show it will cost California billions in tax revenue, forcing deep cuts to hospitals and clinics,” a No on 40 ad says.
Opponents have the money edge. Committees against Prop. 40 reported $99.6 million in contributions through Oct. 6, compared with $32.2 million for supporters, according to the California Secretary of State.
The measure splits Democrats. The California Democratic Party endorsed it. Newsom endorsed Proposition 42, a competing measure that would block it.
At Democratic Headquarters of the Desert, volunteer Elle Kurpiewski said most of the calls coming in are about the propositions, and the group is not telling people how to vote on 40.
“The party recommended a yes vote on it,” Kurpiewski said. “So we are simply saying to people, do your homework.”
“Forty sounds really good. Let’s tax the billionaires,” she said. “Sometimes the way something is written is not necessarily what it fully means.”
Across the valley, East Valley Republican Women is recommending no on both Prop. 40 and Prop. 44.
“The billionaire tax will probably filter down to the rest of us, so we’re all against that,” volunteer Linda Hamilton said. She said people have been coming in all day for help with what she called a very confusing ballot.
Two other measures could cancel Prop. 40 even if it passes. Propositions 41 and 42 are written as competing measures, so if either one gets more votes than Prop. 40, the billionaire tax would not take effect. Prop. 42 would also ban new state taxes on personal property.
Lisa Lenes, a former teacher, cast her ballot Wednesday after working through every measure in the voter guide.
“The process was difficult and it was very time consuming,” Lenes said. “It was just so much information.”
Election Day is Nov. 3. The full analysis of Prop. 40 is in the state’s official voter guide.
