California Voters Reject Prop 40 Billionaire Tax, About 54% to 46% in Friday Tally, as Backers Vow a 2028 Return

Since California voters weighed in on Nov. 3, the Proposition 40 tally has moved from early returns showing 55.6% No to about 54% No and 46% Yes in Friday's public count. Officials still have ballots to count and have not declared final results.

The measure would have imposed a one-time 5% tax on the net worth of California billionaires who lived in the state on Jan. 1, 2026. It is headed for defeat in one of the most Democratic states in the country, in an election that otherwise went heavily the Democrats' way nationally.

Where the votes came from

More than half of voters in some urban counties, including Los Angeles and San Francisco, backed the tax. It lost in the vast majority of counties statewide. In Orange County the No side led by more than 20 points.

Dan Schnur, a politics professor at USC, UC Berkeley and Pepperdine, said most voters in a deep blue state will back more healthcare funding, especially to replace federal cuts. "But in retrospect, the sponsors may wish they've been a little bit less ambitious," he said.

The money

The campaign was one of the most expensive ballot fights in California history. The spending totals vary by count. The Secretary of State's figures, as cited on Nov. 4, showed about $33 million spent in support and more than $130 million in opposition. Other tallies put opposing money higher: $293 million from billionaires, by the LA Times' count, and $316.7 million in total by San Jose Inside's count, which includes the countermeasures.

Google co-founder Sergey Brin was among the opponents who funded the No effort. The Yes on 40 campaign named Brin and Peter Thiel as billionaires "spending tens of millions in non-stop ads" against the measure.

Democrats split

The fight did not run along clean party lines. Gov. Gavin Newsom, who is term-limited, opposed the tax and tried through negotiations to keep it off the ballot, according to San Jose Inside. Governor-elect Xavier Becerra also opposed it, along with San Jose Mayor Matt Mahan, the California Teachers Association, Planned Parenthood of California and United Domestic Workers, which represents 250,000 home care and childcare providers.

On the other side were Sen. Bernie Sanders, the California Democratic Party, the California Federation of Labor Unions and the Democratic Socialists of America. The DSA's California chapter argued the state has the money for quality schools and healthcare and that it "just needs to be transferred from the wrong pockets to the right ones."

Richard Stern of Advancing American Freedom told Fox News Digital that the DSA sees every tax as a way to move money from wealth creators to the state.

What the tax would have raised

SEIU-United Healthcare Workers West, the union that put the measure on the ballot, projected about $100 billion over five years. It said the money would offset federal healthcare cuts, with 90% going to healthcare.

The nonpartisan Legislative Analyst's Office estimated the tax would raise "tens of billions of dollars" over several years, well short of the union's number. It also said billionaires leaving the state could cut income tax revenue by less than $1 billion a year.

That is the heart of the dispute. Proponents said the tax would plug holes left by the 2025 federal tax law. The Yes on 40 website projected 3.4 million Californians losing coverage. San Jose Inside put the figure at 2 million. Opponents, including the California Chamber of Commerce, called it an "unprecedented wealth tax" that sets a "dangerous precedent," and said wealthy residents would simply leave.

The countermeasures

Two competing measures, Propositions 41 and 42, were written to conflict with Prop 40. If either got more votes than 40, it would nullify the billionaire tax. Newsom endorsed Prop 42.

Prop 42 passed 54.3% to 45.7% in results reported Nov. 4. The Epoch Times described it as barring new property taxes. San Jose Inside described it as a ban on all wealth taxes in California. The exact reach of the ban will matter for any 2028 attempt.

What comes next

The defeat did not end the idea. Dave Regan, president of SEIU-UHW, said the union plans to bring the measure back in 2028. Rep. Ro Khanna, whose district includes parts of Silicon Valley, also pledged to return it to the ballot that year.

Nobel economist Joseph Stiglitz said in a statement to AFP through the International Capital Tax Commission that "significant changes rarely move in a straight line." He noted Prop 40 put a billionaire wealth tax on a U.S. ballot for the first time.

Wealth tax bills have also been introduced in Illinois, Maryland, Minnesota, Rhode Island and Washington. California has rejected a wealth tax three previous times this decade. Whether a 2028 version can get around Prop 42 is the open legal and political question once the count is final.