California Voters Reject Billionaire Wealth Tax, Back Asset Shield

California voters have rejected a proposed wealth tax on billionaires and, in a related move, approved a measure designed to shield personal assets from future state levies. The dual outcome reshapes the state’s fiscal policy direction and underscores the influence of well-funded opposition campaigns.

Preliminary vote tallies show Proposition 40, which sought to impose a one-time 5% tax on the net worth of billionaires, failing with approximately 55% of voters against the measure and 45% in favor. The initiative, officially named the “One-Time Wealth Tax for State-Funded Healthcare, Education, and Food Assistance Programs Initiative,” would have applied to residents with over $1 billion in covered assets as of January 1, 2026. Proponents, including the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), estimated it could generate $100 billion over five years to address federal healthcare funding cuts.

The defeat of Proposition 40 followed an extensive and costly campaign by opponents. Less than three dozen of the state’s approximately 260 billionaires contributed $293 million to stop the proposal. Google co-founder Sergey Brin was the largest individual donor, spending $102 million, followed by former Google CEO Eric Schmidt with $40.2 million and venture capitalist John Doerr with $40 million. The “Building a Better California” coalition, largely funded by these individuals, raised over $148 million to campaign against Proposition 40.

Alongside their efforts to defeat Proposition 40, opponents also backed Proposition 42, an initiated constitutional amendment that explicitly prohibits new state taxes on personal property, including retirement holdings, individually-owned assets, and other forms of personal savings. This measure also restricts retroactive taxes. Proposition 42 was approved by voters, with preliminary results showing 54.3% in favor. Its passage means that even if Proposition 40 had gained majority approval, Proposition 42, by securing more “yes” votes, would likely have nullified the wealth tax.

Opponents of the wealth tax, including Governor Gavin Newsom and various business and taxpayer associations, warned that it would prompt wealthy individuals to leave California, ultimately harming the state’s budget. Concerns centered on the impracticality of taxing illiquid assets, such as stakes in private companies, which could force founders to sell ownership to cover tax liabilities, potentially leading to a loss of control and stifling entrepreneurship. [cite: 13,