Prop 40 forces California billionaires to fund healthcare deficit

California voters face a decision on November 3 that could impose a one-time 5% tax on the net worth of the state's approximately 200 billionaires. Proposition 40 targets individuals worth at least $1 billion who resided in the state as of January 1, 2026. The measure seeks to generate $100 billion to cover federal funding cuts to the state's healthcare system resulting from President Donald Trump's recent tax and spending legislation.

Suzanne Jimenez of Service Employees International Union-United Healthcare Workers West describes the proposal as a temporary fix. She states that inaction will lead to a collapse of the healthcare system while lawmakers seek a permanent funding model. The state holds the largest economy in the United States and ranks fourth globally, yet it also contains the nation's largest share of homeless people and one of the widest wealth gaps.

Francesco Trebbi, a public policy professor at the University of California, Berkeley, identifies this as the first billionaire tax targeting the extreme upper percentile of the wealth distribution. He notes the measure is driven by anti-elite sentiment and an attempt to rebalance economic scales. The tax would apply retroactively to those meeting the wealth and residency criteria set for the start of 2026.

Governor Gavin Newsom, whose term is ending, opposes the measure, warning it may drive wealthy residents and their income tax revenue out of the state. Google cofounder Sergey Brin has donated over $100 million to a political organization funding efforts to block the levy. A September poll by the Los Angeles Times and the Berkeley Institute of Governmental Studies shows 45% of likely voters supporting the tax, 42% opposing it, and 13% undecided. A majority is required for passage.

At least six billionaires have reportedly left the state, including Google cofounders Larry Page and Sergey Brin, Peter Thiel, Travis Kalanick, and Don Hankey. Hankey told Forbes he moved to Nevada because the proposal made him feel unwelcome despite the jobs his companies created. Meta chief Mark Zuckerberg told the company's board last month he is considering moving his primary residence out of California. Meta agreed to a new stock deal to cover his potential loss of up to $12.5 billion.

Opinions among the wealthy are divided. Nvidia chief Jensen Huang told CBS that he does not mind paying taxes and accepts that higher earnings warrant higher tax payments. Senator Bernie Sanders argued at a Los Angeles rally that billionaires believe they have a God-given right to rule and predicted they would learn a powerful lesson on election day. DoorDash cofounder Andy Fang called the measure stupid.

The move places California in a unique position, as only Spain, Norway, and Switzerland currently maintain wealth taxes in Europe. Washington state voters are simultaneously weighing a 9.9% tax on annual income exceeding $1 million. In the third quarter of 2025, the top 1% of US households held nearly 32% of national wealth. The Public Policy Institute of California reports that 72% of Californians believe the gap between rich and poor is widening and that the state government should take action.