California voters have rejected a proposed one-time tax on wealth, defeating Proposition 40 during an election campaign that became the most costly in the state’s history.
Proposition 40 would have imposed a single 5% tax on all individuals with a net worth of more than $1 billion as of January 1, 2026. The measure was sponsored by SEIU-United Healthcare Workers West and intended to fund healthcare programs, along with education and food assistance initiatives.
Campaign Spending and Key Figures
The opposition effort against Prop 40 raised nearly $425 million, according to public campaign finance filings. This made it the largest spending campaign in California's electoral history.
Sergey Brin, co-founder of Google, contributed at least $132 million to oppose the tax—by far the single largest donation—to the billionaire-led coalition. Other major donors included executives from Google, Palantir, DoorDash, Stripe, and Reddit, as well as prominent venture capitalists.
Spending surged during October’s first two weeks, with daily expenditures surpassing $2.5 million based on the latest financial disclosures.
Campaign Strategy: Countermeasures on Ballot
The opposition group launched two separate ballot initiatives—Proposition 41 and Proposition 42—as part of a strategy to block Prop 40's passage.
Proposition 41 directly targeted the billionaire tax by proposing its elimination if it failed to pass. Proposition 42 aimed at limiting new taxes in general and included provisions banning any future taxation of billionaire wealth. If either measure received more 'yes' votes than Prop 40, the billionaire tax would not take effect—even if Prop 40 passed.
Supporters of Prop 40 labeled these countermeasures as 'poison pills,' arguing they undermined the original intent of the initiative.
Polarization and Political Backing
The campaign was marked by sharp divisions between progressive leaders and major tech figures. Governor Gavin Newsom consistently opposed the proposal, stating it represented an unfair burden on high-wealth individuals while failing to address broader fiscal needs.
Major unions and progressive politicians—including U.S. Representative Ro Khanna and Senator Bernie Sanders—supported Prop 40, framing it as a response to healthcare cuts under Trump’s One Big Beautiful Bill Act.
In contrast, organizations such as Planned Parenthood Affiliates of California criticized the measure for its narrow scope in funding health programs and questioned whether a one-time tax could effectively support long-term public services.
National Implications
The defeat of Prop 40 may slow momentum at both state and national levels on calls for taxing ultra-wealthy individuals. The result underscores growing influence of private-sector wealth in shaping policy debates through direct financial intervention in elections.