California voters face close contest over proposed 5% billionaire wealth tax

California voters will decide on 3 November whether to impose a one-off 5% tax on billionaires’ wealth, in a closely contested ballot that has divided Democrats, trade unions and some of the world’s richest people.

Proposition 40 aims to raise about $100 billion for healthcare following federal funding cuts under President Donald Trump’s tax and spending legislation. Supporters say the money is needed to protect services; opponents dispute the projected shortfall and warn that the levy could damage California’s finances by encouraging wealthy residents to leave.

A September poll by the Berkeley Institute of Governmental Studies and the Los Angeles Times found 45% of likely voters supported the proposal, 42% opposed it and 13% were undecided. It needs majority approval to pass.

How the proposed tax would work

The measure would tax wealth rather than annual earnings. Its proposed 5% charge would cover billionaires’ overall assets, including stocks, bonds and businesses, rather than being limited to income or capital gains.

More than 200 billionaires are estimated to live in California. To illustrate the scale of the proposal, a person with taxable wealth of $100 billion could face a bill of around $5 billion.

According to the BBC, the measure would apply retroactively to people worth at least $1 billion who were California residents on 1 January 2026. That would make the residency date important even though voters will not decide the proposal until November.

The description of the proposal as a possible world first requires qualification. University of California, Berkeley public policy professor Francesco Trebbi told the BBC he believed it would be the first wealth tax specifically targeting billionaires. That is distinct from saying wealth taxes themselves are new.

Healthcare funding divides supporters and opponents

The campaign is led by Service Employees International Union–United Healthcare Workers West, which argues that taxing billionaire wealth offers a way to replace federal healthcare funding.

Union leader Dave Regan told Bloomberg that California would lose roughly $100 billion in federal healthcare funding over the coming years. His campaign argues that failing to replace that money could threaten medical coverage, healthcare jobs and clinics.

Those projections are contested. Rob Lapsley, president of the California Business Roundtable, told Bloomberg that supporters were overstating the crisis. He argued that future revenue associated with artificial intelligence companies going public could help offset funding losses.

The political divide extends beyond business groups. Senator Bernie Sanders and Congressman Ro Khanna have campaigned for the proposal, while Governor Gavin Newsom opposes it. The California Teachers Association and Planned Parenthood are also among its opponents.

Newsom’s objection centres on the risk of wealthy residents moving elsewhere and taking income-tax revenue with them. KQED reported that he supports a national billionaire wealth tax, distinguishing that from a state levy that could encourage moves across state lines.

Billionaire opposition and a wider campaign

Google co-founder Sergey Brin has committed more than $100 million to a political organisation backing efforts to block the tax, according to Bloomberg. Opponents are also supporting Propositions 41 and 42, which the report says could nullify the wealth tax if they receive more votes.

Not all billionaires oppose the measure. Businessman Tom Steyer has said he would vote for it despite concerns about its drafting, while Nvidia chief executive Jensen Huang has expressed support for paying taxes.

Regan is already considering campaigns beyond California, telling Bloomberg he had received interest from people in roughly two dozen other states. For now, however, the immediate test is whether Proposition 40 can turn its narrow polling lead into a majority on election day.