California voters said no to taxing billionaires. Proposition 40, a one-time 5% tax on the wealth of Californians worth more than $1 billion, failed, according to an Associated Press projection on Monday. With precincts reporting as of Monday evening, about 53% of voters had voted no, according to FOX 11 Los Angeles, citing the Secretary of State.
It would have hit roughly 200 billionaires. Supporters, led by the healthcare workers’ union SEIU-UHW, pitched it as a way to cover California’s losses from federal health care cuts in the “Big Beautiful Bill.” The Yes on 40 campaign said it would raise around $100 billion over five years.
Who paid to defeat the billionaire tax?
Billionaires, mostly. The main opposition group, Building a Better California, raised $333.1 million this year, ABC News reported, and most of that came from billionaires. The single biggest donor was Google co-founder Sergey Brin, at $102 million, with his contributions reported from Reno, Nevada.
That’s a remarkable number. The people the tax would have hit spent hundreds of millions of dollars to stop it, and it worked. Tech investors also warned that the state’s top earners would leave. Vinod Khosla argued exactly that, according to ABC.
Why did Gavin Newsom oppose Prop 40?
Gov. Gavin Newsom was the measure’s most prominent opponent, which split his own party. He argued billionaires could dodge it simply by moving to another state, and he pushed a national billionaire tax instead. Sen. Bernie Sanders and Rep. Ro Khanna backed Prop 40. Khanna told ABC News in October that he and Newsom are “polar opposites” on it, and went further: “He doesn’t want to offend some of the billionaires who he wants to finance his campaigns, and that’s the question: Are we going to be a party for the working class?”
The fight lands at an awkward moment for Democrats, a week after they won the House and Senate running on prices and the cost of living. For a look at how a different big-state tax fight went on the same ballot, see what Florida’s Amendment 3 means for your property taxes.
The BeezLoop Take
Newsom’s case wasn’t crazy. A one-time state wealth tax is easy to dodge with a moving truck, and Brin’s donations coming from Nevada sort of prove the point. But that’s an argument for a national tax, and Newsom will have to show he means it now that the state option is dead.
The bigger problem hasn’t gone anywhere. The federal health cuts that Prop 40 was meant to cover are still coming, and Californians on Medi-Cal will feel them. Voters rejected one way to pay for that care. Nobody has offered another.
The open question: with the billionaire tax gone, who pays for the hole in California’s health care budget, and does Newsom’s national tax ever get more than a speech?
Sources: ABC News · FOX 11 Los Angeles · California Secretary of State voter guide · ABC News (video)
