California Proposition 40 wealth tax proposal

California voters will decide on November 3 whether to implement Proposition 40, a measure that would impose a one-time 5% tax on the net worth of residents with more than $1 billion. The tax would apply to individuals who were California residents on January 1, 2026, with payments due in 2027. Under the proposal, 90% of the revenue would be allocated to healthcare, with the remaining funds supporting education, food assistance, and tax collection costs.

The Legislative Analyst’s Office estimates the tax could generate tens of billions of dollars, though exact figures are uncertain due to market volatility and potential tax avoidance. While supporters, including the Service Employees International Union-United Healthcare Workers West, argue the funds are necessary to offset federal cuts to Medi-Cal, opponents warn the tax could drive billionaires out of the state.

Meta’s SEC filings highlight potential impacts on major tech figures like Mark Zuckerberg. Because the tax is based on ownership rather than voting control, Zuckerberg might be forced to sell shares to meet a multi-billion dollar liability. Selling his Class B shares, which carry 10 votes each, would convert them into Class A shares, thereby reducing his 61% voting control over Meta.