With ballots already in the mail, the one-time wealth tax polls narrowly ahead, but two competing measures backed by Sergey Brin would cancel it if either draws more votes.
By Staff Reporter
With mail ballots in the hands of California voters and less than three weeks until Election Day, the most closely watched measure on the state’s crowded November ballot faces a peculiar arithmetic: Proposition 40, a one-time tax on billionaires, could win a majority and still never take effect.
The measure would impose a one-time tax of 5 percent on the net worth of Californians with more than $1 billion in assets, with the revenue directed primarily to health care, according to the official voter guide published by the secretary of state. The nonpartisan Legislative Analyst’s Office estimates that it would raise “tens of billions of dollars spread over several years,” while warning of a possible ongoing loss of less than $1 billion a year in income tax revenue if billionaires change their behavior, including by leaving the state.
But two other initiatives on the same ballot, Propositions 41 and 42, were written in ways that would nullify the billionaire tax if either passes with more votes than Proposition 40. Both were proposed by the Google co-founder Sergey Brin, KALW reported.
A narrow lead, and a fading one
A Public Policy Institute of California survey conducted Sept. 4 to 10 found 52 percent of likely voters supporting Proposition 40 and 46 percent opposed. Seven in 10 Democrats backed it, while three in four Republicans and a slim majority of independents were opposed.
The same poll found narrow majorities supporting the measures that could undo it: 51 percent for Proposition 41 and 54 percent for Proposition 42. Mark Baldassare, the survey’s director, described Californians generally as “grumpy,” and nearly 80 percent of likely voters told PPIC that 14 statewide measures were too many.
Other polling has been less favorable for the tax. Politico reported on Thursday that multiple surveys last month found the measure drawing only a narrow plurality, with support in the mid-40s, and that the campaign behind it has little money while opponents dominate the airwaves.
What the measures would do
Proposition 40 would apply to individuals who were California residents on Jan. 1, 2026, and would allow them to pay all at once or over five years with interest, according to USC Annenberg Media. It would tax stocks, private businesses, art and intellectual property, while excluding real estate and most pensions and retirement plans. Ninety percent of the revenue would go to health care, with the remainder to food assistance, education and administration, ABC7 reported.
Darien Shanske, a law professor at the University of California, Davis, who helped draft the measure, told Annenberg Media that it was conceived as a short-term response to federal Medicaid cuts in the budget law Congress passed in 2025.
Proposition 41 would nullify state taxes enacted after Jan. 1, 2026, that exempt their revenue from the state’s voter-approved spending limit, which Proposition 40 does, and would require the state auditor to review programs funded by new special taxes. Proposition 42 would prohibit any new state tax on the ownership of personal property, which includes financial assets, as well as taxes that apply retroactively, and would nullify conflicting taxes enacted after Jan. 1, 2026.
Unusual alliances
The fight has scrambled the usual lines in California politics. The California Democratic Party, the American Federation of State, County and Municipal Employees, Senator Bernie Sanders of Vermont and Representative Ro Khanna of Fremont support Proposition 40, which is sponsored by SEIU-United Healthcare Workers West.
Gov. Gavin Newsom opposes it, as do the California Medical Association, Planned Parenthood Affiliates of California, the California Teachers Association, California Professional Firefighters and the State Building and Construction Trades Council, according to the voter guide and Annenberg Media. The medical association and Planned Parenthood have argued that the measure offers only temporary and uncertain health care funding.
In San Francisco, the local Democratic Party has broken with the state party and opposes the measure. “I don’t think anyone in San Francisco thinks that we shouldn’t be taxing billionaires more,” Nancy Tung, the party’s chair, told ABC7. “This is a conversation that we should be having on a much broader scale, not just California and not just one time tax.”
Supporters reject the argument that the tax would harm the state’s business climate. “This is a tax on billionaires, 250 individuals. It has nothing to do with their businesses,” Dave Regan, president of SEIU-UHW, told ABC7. “The billionaires have never had it better in California.”
The official opposition argument in the voter guide calls Proposition 40 “a flawed, one-time tax scheme that hurts our economy, damages our state budget, and contains a loophole exposing all Californians to taxes we can’t afford.” Supporters counter, in the same guide, that federal cuts eliminated coverage for more than a million Californians and that “it’s time to make billionaires pay their fair share.”
Why it matters for the Bay Area
The stakes are especially high in the Bay Area, home to many technology founders whose fortunes are held largely in company stock, the kind of asset Proposition 40 would tax. How to value stakes in privately held companies is one of the hardest questions the measure raises. Charles Swenson, an accounting professor at the University of Southern California, put the problem plainly to Annenberg Media: “If somebody owns a technology company, you can value the real estate, but how do you value the intellectual property?”
Mr. Shanske argued that departures would be limited because the tax applies only to those who were residents at the start of the year. “All these new people who are moving in this year for the AI boom,” he said, “they’re just not going to be subject to this tax.”
The outcome may hinge on whether voters, confronting a long ballot, understand how the three measures interact. A voter who supports the billionaire tax but also casts a yes vote on Proposition 41 or 42 could, in effect, be voting to cancel it. The last day to register is Monday, Oct. 19; Election Day is Nov. 3.
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