California Proposition 40 Explained: The Billionaire Tax on the November Ballot

What Is Proposition 40?

Proposition 40 is a measure on California’s November 3, 2026 ballot. If voters approve it, the state would charge a one-time tax of 5 percent on the net worth of billionaires who lived in California on January 1, 2026. The money would go mostly to health care, with the rest going to education, food assistance, and running the tax.

People often call it the “California billionaire tax.” Its full name is the One-Time Wealth Tax for State-Funded Health Care Programs Initiative, also known as the 2026 Billionaire Tax Act.

Who Would Pay It?

The tax would apply only to people worth at least $1 billion. A person’s net worth would be measured on December 31, 2026, while residency would be fixed as of January 1, 2026. That detail matters: someone who was a California resident on that date would still fall under the tax even if they moved out of the state later.

For people worth between $1 billion and $1.1 billion, the rate would phase in gradually, reaching the full 5 percent at $1.1 billion and above. A married couple would be counted together as one taxpayer, including a spouse’s worldwide assets.

Real estate, pensions, and retirement accounts would generally not count when working out taxable wealth. The tax would be due in 2027, and taxpayers could choose to pay it over five years instead — but spreading it out would cost more, because later payments would carry a 7.5 percent annual deferral charge.

Where Would the Money Go?

Ninety percent of the money raised would have to be spent on public health care services. The remaining 10 percent would go to education, food assistance, and administering the tax. The state would decide the exact timing and details of spending, but it could not use the money for other purposes.

The money would also be exempt from some of the state constitution’s usual spending rules, including the rules that limit spending and require a set amount to go to schools and community colleges.

How Much Could It Raise?

Estimates vary a lot, and this is one of the most argued-over parts of the measure. California’s Legislative Analyst’s Office projects tens of billions of dollars in temporary revenue. Some economists, including Emmanuel Saez and Gabriel Zucman, have put the figure near $100 billion. Other analysts, Benjamin Jaros and Joshua Rauh, estimate $28 billion to $36 billion in collections before counting losses in other tax revenue, and they argue the state could come out behind overall once billionaire departures are factored in.

The honest answer is that no one knows for sure. It depends on how many billionaires are counted, how their wealth is valued, and how many leave the state.

Who Supports It, and Who Opposes It?

The measure was sponsored by SEIU United Healthcare Workers West, a health care workers’ union. Supporters say billionaires pay lower effective tax rates than middle-class workers, and that a one-time tax on extreme wealth is a fair way to fund health care and other public services.

Governor Gavin Newsom opposes the measure. Critics argue that wealthy residents will leave California, taking their future income tax payments with them, and that valuing private companies and other hard-to-price assets will be messy and open to legal fights.

Supporters were offered a compromise earlier in 2026 — dropping the 5 percent tax if the legislature passed a smaller 2 percent levy — but Newsom rejected that deal, and the measure stayed on the ballot.

Could Something Else Stop It?

Yes, possibly. Two competing measures, Propositions 41 and 42, are also on the November ballot. If either of them gets more yes votes than Proposition 40, Proposition 40 could be blocked from taking effect if courts find the measures conflict. Legal challenges are also expected if it passes.

What Happens Next?

California voters decide on November 3, 2026. If it passes and survives the competing measures and the courts, the first payments would be due in 2027. If it fails, nothing changes — the tax simply never takes effect.

For most Californians, Proposition 40 would not change their own taxes at all. It applies only at the very top of the wealth scale. But the result will still say a lot about how the state wants to pay for health care in the years ahead.