California Prop 40 trails as billionaire tax votes are counted

Early results

Early returns Wednesday showed Proposition 40 with 44.4% support and 55.6% opposition. About 60% of votes had been counted as of Wednesday afternoon, and election officials were continuing to process ballots.

The figures were not a final result. Proposition 40, called the Billionaire Tax Act, would create a one-time state tax rather than an annual wealth tax.

How the tax would work

The measure would charge 5% of the net worth of California residents whose wealth exceeds billion. Net worth would include financial holdings such as stocks, bonds and other property interests.

The tax would be due in 2027. Affected taxpayers could make payments over five years, although the Legislative Analyst’s Office said that option would increase the amount paid.

Supporters estimated that the measure could raise about billion over five years. The Legislative Analyst’s Office estimated revenue in the tens of billions of dollars and said departures by some billionaires could reduce California income-tax revenue by less than billion annually.

Arguments over services and the economy

SEIU-United Healthcare Workers West sponsored Proposition 40, arguing that the money would help address expected federal healthcare funding reductions and protect services. The union said it could pursue another billionaire-tax measure in 2028 if state officials do not act.

Opponents argued that the measure could harm California’s economy and public services by encouraging wealthy residents to leave. Gov. Gavin Newsom opposed the proposal on that basis, while independent Vermont Sen. Bernie Sanders supported requiring the wealthiest Californians to contribute more toward public services.