California voters have rejected a proposed one-time 5% tax on individuals with a net worth exceeding $1bn, handing billionaires a victory in the state's most expensive ballot campaign ever. Proposition 40 would have raised money for healthcare programs, education and food assistance, but faced overwhelming opposition spending that dwarfed support for the measure. The campaign finance battle, which saw spending surpass $2.5m a day in the first two weeks of October, underscores the growing divide over whether the ultra-wealthy should contribute additional taxes.
Proposition 40 was sponsored by healthcare union SEIU-United Healthcare Workers West and backed by major unions and progressive politicians including Vermont Senator Bernie Sanders and California Congressman Ro Khanna. The measure framed itself as a solution to healthcare cuts stemming from Trump's One Big Beautiful Bill Act. However, it faced opposition from both Democratic and Republican gubernatorial candidates, as well as organisations such as Planned Parenthood Affiliates of California, which objected to its structure as a one-off tax funding only certain healthcare programs.
The billionaires' campaign against the measure was led by Google co-founder Sergey Brin, who contributed at least $132m to the opposition effort, according to campaign finance filings. Other major donors included executives from Google, Palantir, DoorDash, Stripe and Reddit, along with several prominent venture capitalists. The opposition campaign mounted a nearly $425m battle, with billionaires portraying the tax as "an everyone tax" rather than targeting only the ultra-wealthy.
Strategy played a crucial role in the defeat. Opponents placed two separate counter-measures on the ballot, Proposition 41 and 42. Proposition 41 directly targeted the billionaire tax, while Proposition 42 proposed limiting certain new taxes and would ban any taxation on billionaire wealth. If either measure received more yes votes than Prop 40, the billionaire tax would not take effect even if it passed. Supporters of Prop 40 called these measures "poison pills". The result could undermine momentum for similar wealth tax proposals at the national level and states considering new laws targeting ultra-wealthy individuals.
For California savers and business owners, the defeat means no new tax on billionaire wealth will fund additional healthcare, education and food assistance programmes in the state.