California voters face a choice in November on Proposition 40, a measure that would impose a one-time 5% tax on the roughly 250 billionaires living in the state. The tax would apply to people whose combined wealth equals about half of California's economy, according to backers of the measure. Supporters say the tax would raise approximately 100 billion dollars, with 90% directed to healthcare, helping to preserve coverage for 3 million Californians who could otherwise lose it under federal cuts expected to total more than 30 billion dollars annually.
The proposal has divided California's Democratic leadership. US Congressman Rohit Khanna, who represents California's 17th district, and Senator Bernie Sanders have endorsed Proposition 40, citing support from nurses and healthcare workers who placed the initiative on the ballot. However, Governor Gavin Newsom has opposed it, saying no when healthcare workers offered to reduce the tax rate to 2% in exchange for his backing. Newsom has instead endorsed Proposition 42, a competing measure backed by billionaires that would ban California from ever taxing billionaire wealth.
Billionaires opposing Proposition 40 have spent heavily to block it. Sergey Brin has spent 102 million dollars against the measure, while Peter Thiel contributed 3 million dollars to defeat it. Elon Musk, who spent roughly 290 million dollars to help return Trump to power, has attacked the proposal on his social media platform X, warning that the precedent could eventually extend to everyone. Billionaires opposing the measure have outspent Proposition 40's supporters more than five to one.
The fight over California's measure reflects a broader national debate. Khanna and Sanders introduced the Make Billionaires Pay Their Fair Share Act in March, which would impose a 5% annual tax on America's 938 billionaires, whose combined wealth totals 8.2 trillion dollars. According to supporters, such a tax could raise more than 4 trillion dollars over a decade. Khanna argues that if Proposition 40 passes, California would become the first place to tax billionaire wealth, potentially setting a model for the nation.
For California workers and middle-income families, the outcome determines whether the state can maintain healthcare funding without federal support or must find alternative revenue sources to cover the expected shortfall.