California’s electorate faces a significant decision on Proposition 40, which would implement a one-time 5% tax on the net worth of individuals with assets exceeding $1 billion. The measure targets roughly 200 billionaires residing in the state and seeks to generate approximately $100 billion for the state’s healthcare system, addressing anticipated federal funding reductions. Supporters argue the tax ensures equitable contribution from the ultra-wealthy while helping close California’s substantial budget gaps.
Proponents of the measure, including the Service Employees International Union-United Healthcare Workers West, characterize it as a necessary response to significant federal funding cuts to healthcare programs. Some billionaires, including Nvidia CEO Jensen Huang, have voiced support for the proposal. However, the measure faces considerable opposition from prominent figures and political leaders. Google co-founder Sergey Brin has contributed over $100 million to political organizations seeking to block the tax, while California Governor Gavin Newsom, whose tenure is concluding, has expressed concerns that the tax could prompt wealthy residents to relocate and reduce state income tax revenue.
Polling data from the Berkeley Institute of Governmental Studies and the Los Angeles Times indicates modest support, with 45% of likely voters in favor, 42% opposed, and 13% undecided. The proposal requires majority approval from voters. According to reports, at least six billionaires have already relocated from California prior to the January 1, 2026 retroactive application date, including Google co-founders Larry Page and Sergey Brin and venture capitalist Peter Thiel. Meta CEO Mark Zuckerberg has indicated consideration of relocating his primary residence.
International comparisons reveal limited precedent for wealth taxation. While once common in Europe, wealth taxes now exist in only three European nations: Spain, Norway, and Switzerland. Critics argue such taxes create administrative complications, suppress investment, and yield limited revenue. Research from Norway documented significant capital flight following wealth tax increases, while Swiss data showed that modest tax increases resulted in substantial reductions in taxable wealth.
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