California voters have rejected a groundbreaking proposal to impose a one-time tax on billionaires, handing a major victory to some of the state’s wealthiest residents who mounted an expensive campaign against the initiative.
Proposition 40, which sought to impose a 5% tax on the net worth of California residents worth more than one billion dollars, was officially rejected following Tuesday’s November 3, 2026, elections.
The proposal was designed to generate tens of billions of dollars to help cushion the impact of federal healthcare funding cuts, with approximately 90% of the proceeds earmarked for healthcare programmes and the remainder allocated to education and food assistance.
Supporters had projected the measure could raise approximately 100 billion dollars over five years, providing financial relief to millions of Californians expected to lose access to healthcare services following reductions in federal funding.
However, the proposal faced fierce opposition from technology executives, business groups and political leaders, including California Governor Gavin Newsom, who argued that imposing the tax could prompt wealthy residents to relocate, undermine economic competitiveness and destabilise state revenues.
Available election results showed approximately 53% of voters opposed the measure, compared with 47% who supported it.
The campaign against Proposition 40 was among the most expensive political battles in California’s history, with opponents spending hundreds of millions of dollars to defeat the initiative.
Google co-founder Sergey Brin emerged as one of the biggest financial contributors to the opposition, donating more than 100 million dollars to a political committee campaigning against the tax.
The opposition coalition raised more than 333 million dollars, significantly outspending supporters and funding advertisements warning that the proposal could damage California’s economy and threaten jobs.
Some campaign messages also suggested the tax could eventually expose ordinary residents to higher taxation, claims disputed by supporters of the initiative.
Brin and fellow Google co-founder Larry Page were among technology billionaires who began moving out of California amid concerns about the proposed levy, underscoring the potential consequences of the initiative even before voters made their decision.
The measure also exposed divisions within the Democratic Party, with the California Democratic Party backing the tax while Newsom opposed it. Newsom maintained that taxing billionaire wealth at the state level could undermine California's competitiveness, despite acknowledging concerns about economic inequality.
Progressive leaders, including United States Senator Bernie Sanders and Senator Elizabeth Warren, supported the proposal, arguing that the ultrawealthy should contribute more towards addressing inequality and protecting essential public services.
The defeat is expected to intensify debate over wealth taxation in the United States, particularly as Democrats continue pushing for policies targeting the country's richest individuals.
Proponents of Proposition 40 have indicated they could return with another billionaire tax initiative in 2028 if California lawmakers fail to develop an alternative mechanism to address healthcare funding shortfalls.
The outcome leaves California facing difficult decisions over how to sustain healthcare services and other social programmes amid anticipated reductions in federal assistance.
