California voters have rejected a proposed wealth tax on billionaire residents, according to a Decision Desk HQ projection, delivering a victory to technology and business executives who spent hundreds of millions of dollars opposing the measure. Gov. Gavin Newsom, a Democrat, also opposed the proposal.
With 76 percent of the vote counted as of 8:51 p.m. EST on November 6, Decision Desk HQ reported that 54 percent of voters were against Proposition 40 and 46 percent supported it. Polling before the election had indicated greater opposition than support among California voters, although the projected outcome remained close.
Proposition 40 sought to impose a one-time tax of 5 percent on the wealth of California’s billionaire residents. Had it passed, it would have been the first such tax in the nation. Most of the money raised would have supported state healthcare programs, while the remaining revenue would have gone toward food assistance and education initiatives.
The potential proceeds were substantial, according to the nonpartisan state Legislative Analyst’s Office. Its analysis estimated that applying the proposed tax to California’s roughly 200 billionaires would bring in tens of billions of dollars for the state.
The proposal divided Democrats in California. The state Democratic Party backed the measure, as did the AFL-CIO and Teamsters unions. Newsom broke with those supporters, objecting to how the proposition would distribute its revenue rather than rejecting the idea of a billionaire tax at the federal level.
The term-limited governor said he supported a federal tax on billionaires but criticized the California measure for directing nearly all its proceeds to healthcare. In a June Substack post, he pointed to housing, childcare, public safety workers answering 911 calls and public universities as priorities left without funding under the proposal.
Newsom argued that the allocation did not reflect an appropriate approach to state spending. “This is not how we should set California’s budget priorities,” he wrote in the post, explaining his opposition to the proposition’s emphasis on healthcare funding.
California billionaires, including many executives in Silicon Valley, also lobbied against Proposition 40. They contributed more than $333 million to the nonprofit Building a Better California as part of their opposition to the measure. The projected rejection gives those executives the outcome they sought in the statewide vote.
