California Proposition 40 billionaire wealth tax faces tight election race

California voters are closely divided over Proposition 40, a proposed one-time 5% wealth tax on residents with assets exceeding $1 billion. Designed to shore up funding for the state’s Medi-Cal healthcare program following federal budget cuts, the measure aims to raise up to $100 billion. However, recent polling from the Citrin Center-Politico shows support at 46% with 43% opposed, suggesting the measure may struggle to reach a majority.

Opponents, including a group called Building a Better California, have raised over $300 million to defeat the tax. High-profile billionaires such as Sergey Brin, Larry Page, and Peter Thiel have reportedly moved out of the state to avoid the tax, which would be applied retroactively to January 1, 2026.

A study by Stanford economists warns that these departures could cause the tax to backfire. The researchers suggest that while the tax might generate $30 billion, the resulting loss in annual income tax revenue from departing wealthy residents could exceed the windfall by approximately $39 billion. Additionally, Propositions 41 and 42 are on the ballot, which are designed to create legal barriers that could nullify the effects of Proposition 40 if passed.