California voters will decide next month whether to adopt what supporters describe as an unprecedented proposal: a one-time, 5% state tax on the net worth of the state's roughly 200 billionaires. The measure, known as Proposition 40, was put forward by healthcare workers union leader Dave Regan and the SEIU United Healthcare Workers West after President Trump's proposed federal budget included cuts to Medicaid funding over the coming years. Regan said the goal is to restore approximately $100 billion in healthcare funding that would otherwise be lost, preventing what he described as three-and-a-half million people losing health insurance and the closure of hospitals, clinics and emergency rooms. If the wealth tax passes, the state is expected to collect $100 billion over five years, with 90% of the revenue specifically earmarked for healthcare.
The proposal has triggered significant opposition and unusual political alliances. Some billionaires have already left California, including venture capitalist Peter Thiel and Google co-founders Larry Page and Sergey Brin. Brin is spending more than $100 million to oppose the measure. California Governor Gavin Newsom, a Democrat, has called Proposition 40 "a flawed initiative," and former Democratic Congresswoman Katie Porter, who generally supports progressive taxation, has also come out against it. Porter warned that the tax would cause wealthy individuals to leave the state, reducing California's tax base permanently. Two competing ballot measures, Propositions 41 and 42, have been placed on the ballot by opponents; if either receives more votes than Prop 40, the wealth tax would be nullified.
The debate highlights what tax experts describe as fundamental inequities in the American tax system. Ray Madoff, a professor at Boston College Law, explained that billionaires typically accumulate wealth in stocks that are not taxed until sold, allowing the richest Americans to legally avoid paying taxes despite their enormous wealth. She called the existing system "deeply broken" and comparable to pre-revolutionary France's aristocracy. However, Madoff cautioned that Proposition 40 alone cannot solve the problem, noting that meaningful change must occur at the federal level, though she acknowledged the measure has "symbolic value."
Not all billionaires oppose the tax. Jensen Huang, founder and CEO of Nvidia and the seventh richest person in the world with a net worth of about $200 billion according to Forbes, said he supports it. "I don't mind paying taxes; the more you make, the more taxes you pay, so I'm okay with that," Huang said. He added that paying approximately $8 billion over five years would be "a privilege." Huang described himself as "the ultimate American dream" and expressed gratitude for the opportunities America provided him.
According to recent polling, voter sentiment is becoming more divided on the issue. Supporters frame the vote as a response to the Trump administration's policies, while opponents worry about the economic consequences of billionaires relocating. Regan has already indicated that other states may follow California's lead if the measure passes on November 3. For California's residents, the outcome will determine whether the state can fund healthcare services through this temporary five-year mechanism or must pursue alternative solutions to the anticipated federal funding cuts.