California’s Billionaire Tax Is Trailing After Silicon Valley’s Wealthiest Spent Millions To Stop It.

California's proposed billionaire tax was heading toward defeat Wednesday, even as Democrats celebrated sweeping victories across the country. The ballot measure, which would impose a one-time 5% tax on the state's wealthiest residents, faced fierce opposition from Silicon Valley billionaires who helped raise hundreds of millions of dollars to stop it.

With about 60% of the estimated vote counted, 55.5% of California voters opposed Proposition 40, compared with 44.4% supporting it, according to Associated Press election figures published by KQED. The result had not yet been officially called.

The proposal would tax the net worth of California residents with assets valued above $1 billion, potentially affecting roughly 200 billionaires. Its supporters wanted the money to help fund healthcare and other public services following federal spending cuts.

But the campaign became a much larger battle over wealth, taxation and California's ability to retain some of the world's richest technology entrepreneurs.

Google co-founder Sergey Brin emerged as one of the measure's most prominent opponents, contributing $102 million to Building a Better California, a political committee established to fight the tax.

The broader opposition campaign, which also supported two competing ballot measures, raised more than $330 million, according to KQED. Supporters of Proposition 40 raised approximately $33 million.

Brin also moved out of California as the tax debate intensified, according to CalMatters, which reported that several wealthy residents had shifted their residences or business assets out of the state in response to the proposal.

Opponents argued that taxing accumulated wealth rather than income could encourage billionaires to leave California, taking investment, businesses and future tax payments with them.

The measure also divided Democrats. Gov. Gavin Newsom opposed the proposal, arguing it could damage the state's economy and tax base. The California Teachers Association and Planned Parenthood were also among its opponents, despite the measure's proposed healthcare funding.

Supporters, including labor organizations and independent Sen. Bernie Sanders, argued that billionaires should contribute more toward public services, particularly as federal funding cuts threatened healthcare programs.

Under California's official ballot proposal, Proposition 40 would impose a one-time tax of up to 5% on covered assets belonging to billionaires who were California residents on January 1, 2026.

The tax would apply to stocks, bonds, businesses and other valuable holdings, while real estate, pensions and retirement accounts would generally be excluded.

Payments would be due in 2027, although taxpayers could spread them over five years at an additional cost.

Ninety percent of the revenue would be allocated to healthcare services, with the remaining 10% directed toward education, food assistance and administrative expenses.

The Service Employees International Union-United Healthcare Workers West, which organized the initiative, estimated that the tax could generate $100 billion over five years.

The nonpartisan California Legislative Analyst's Office was more cautious, estimating that the tax would generate tens of billions of dollars over several years.

It also warned that changes in billionaires' financial decisions, including leaving California, could reduce the state's annual income tax revenue by less than $1 billion.

The billionaire tax was not the only measure facing voters. Two competing proposals, Propositions 41 and 42, were introduced by opponents of Proposition 40 and designed to prevent the wealth tax from taking effect.

Proposition 42, which would prohibit new taxes on certain financial assets and most retroactive taxes, was leading with approximately 54% support in early Wednesday returns. Newsom and Brin were among its supporters.

Proposition 41, which would impose additional restrictions on taxes that bypass state spending limits and require certain audits, was trailing.

Under California's rules governing conflicting ballot initiatives, a competing measure receiving more affirmative votes could prevent the billionaire tax from taking effect, even if Proposition 40 ultimately secured majority support.

For the labor union behind the proposal, the early results were not the end of the fight.

Dave Regan, president of SEIU-UHW, said the union would consider returning to voters in 2028 if California lawmakers failed to find another way to address healthcare funding shortfalls. "That's not a hypothetical. That's our plan," Regan told CalMatters.

Democratic Rep. Ro Khanna, whose district includes parts of Silicon Valley, also signaled that he would continue supporting efforts to tax large fortunes.

"I'm proud of our efforts wherever we end up," Khanna said Tuesday, according to SFGATE, adding that he would support bringing the issue back in another election cycle.