California voters are deciding whether to approve Proposition 40, a one-time 5% tax on the net worth of all billionaires in the state, aimed at raising $100bn to address federal funding cuts to the healthcare system. The measure targets a little more than 200 ultra-wealthy individuals including Meta chief Mark Zuckerberg, media mogul Oprah Winfrey and filmmaker George Lucas. According to a September poll from the Berkeley Institute of Governmental Studies and the Los Angeles Times, 45% of likely voters favour the tax, 42% oppose it and 13% remain undecided. The statewide ballot measure requires approval by a majority of residents.
Francesco Trebbi, a public policy professor at the University of California, Berkeley, described the measure as historic, noting it could help address California's wealth gap. The state has the largest economy in the US and the fourth largest global economy, larger than India and the UK, yet it is home to the largest share of homeless people in the nation and one of the highest wealth gaps. Suzanne Jimenez, chief of staff for Service Employees International Union-United Healthcare Workers West, which championed the initiative, told the BBC the measure is a "short-term solution" to federal funding cuts under US President Donald Trump's tax and spending bill. "If we do nothing, we're going to see a collapse of our healthcare system," she said.
The proposal has triggered significant opposition and prompted some billionaires to leave California. At least six billionaires, including Google co-founders Larry Page and Sergey Brin, venture capitalist Peter Thiel and former Uber CEO Travis Kalanick, have reportedly left the state ahead of the 1 January 2026 residency deadline. Don Hankey, founder of Hankey Group, told Forbes he relocated to Nevada because of the proposed tax, saying the measure made him feel unwanted despite his company employing thousands of Californians. Mark Zuckerberg told Meta's board he was considering moving his primary residence, prompting Meta to offer him additional shares worth billions to compensate for potential tax losses estimated at $12.5bn.
California Governor Gavin Newsom has voiced concerns that the measure could drive wealthy residents out of state and reduce crucial income tax revenue. Google co-founder Sergey Brin has given more than $100m to a political organisation funding ballot measures to block the wealth tax, the Los Angeles Times reported. However, the measure has secured some notable supporters. Nvidia CEO Jensen Huang backed the tax in an interview with CBS, saying "I don't mind paying taxes. The more you make, the more taxes you pay. I'm okay with that." US Senator Bernie Sanders campaigned in support at a Los Angeles rally, telling billionaires on 5 October that they would "learn a very powerful lesson" on 3 November.
Wealth taxes have become increasingly rare globally. Dr Kristian Niemietz, head of political economy at the Institute of Economic Affairs, said wealth taxes are "more trouble than they are worth" because they cause administrative issues, suppress investment, lead to capital flight and raise limited revenue. In Europe, wealth taxes now exist only in Spain, Norway and Switzerland. When Norway increased its wealth tax, a local news organisation found that more super wealthy people left the country in 2022 than in the preceding 13 years combined. A study on Switzerland found that a 0.1 percentage point increase in wealth tax reduced taxable wealth by 3.5%.
For Californian savers and business owners, the measure's outcome will determine whether they face higher taxes if their wealth exceeds $1bn, while lower-income residents could benefit from increased healthcare funding if the tax is approved and generates the projected revenue.