California Ballot Measure Targets Billionaire Net Worth for One-Time 5% Tax

California voters will determine in November whether to impose a one-time 5% tax on the net worth of every billionaire residing in the state. This measure, known as Proposition 40, is designed to extract billions of dollars from a group of just over 200 individuals to address significant funding gaps in the public health sector. The proposal represents a direct financial intervention aimed at wealthy residents to support essential state services.

Supporters project that the levy will raise approximately $100 billion. This revenue is intended to replace federal funding that was reduced following the implementation of a sweeping national tax and spending bill. Suzanne Jimenez of the Service Employees International Union-United Healthcare Workers West described the initiative as a short-term solution. She warned that inaction could lead to a collapse of the healthcare system while longer-term funding strategies are developed.

The debate highlights deep economic contrasts within the state. California possesses the largest economy in the United States and ranks fourth globally, surpassing nations like India and the United Kingdom. Despite this economic scale, the state maintains the largest share of the national homeless population and one of the widest wealth gaps. Francesco Trebbi, a public policy professor at the University of California, Berkeley, noted that this is likely the first tax of its kind, targeting an extreme percentile of the wealth distribution.

Opposition is led by Governor Gavin Newsom, whose term is concluding. He argues that the tax may encourage wealthy residents to relocate, thereby reducing the state's income tax base. Sergey Brin, a co-founder of Google, has donated over $100 million to a political organization supporting measures that could block the proposal. A September poll by the Los Angeles Times and the Berkeley Institute of Governmental Studies found that 45% of likely voters supported the measure, while 42% opposed it and 13% remained undecided. A majority vote is required for passage.

If approved, the tax would apply retroactively to individuals with a net worth of at least $1 billion who lived in California as of January 1, 2026. At least six billionaires have reportedly already left the state, including Google co-founder Larry Page, venture capitalist Peter Thiel, former Uber CEO Travis Kalanick, and Hankey Group founder Don Hankey. Hankey cited the proposal as a reason for his move to Nevada, stating he felt unwanted despite the jobs his companies created. Mark Zuckerberg, the chief of Meta, informed the company board he was considering moving his primary residence, with the firm agreeing to a stock deal to cover potential losses that could reach $12.5 billion.

The stakes extend beyond individual fortunes to the broader political and economic landscape. Washington state voters are simultaneously considering a 9.9% tax on income exceeding $1 million annually. In Europe, only Spain, Norway, and Switzerland currently maintain wealth taxes. US inequality has reached levels not seen in over three decades, with the top 1% of households holding nearly 32% of wealth in the third quarter of 2025. Trebbi suggested the measure reflects an anti-elite sentiment aimed at re-balancing the economic scale.