Why California’s Billionaire Tax Could Pass but Not Take Effect

What Proposition 40 would do

California voters will decide on November 3 whether to impose a one-time 5% tax on state residents with more than billion in assets. Proposition 40 would apply to taxpayers who lived in California as of January 1, 2026, and would operate retroactively.

Assets covered by the measure would include stock shares, bonds, other evidence of debt, and legal or equitable interests. Supporters say the tax could raise about billion over five years, with the money designated primarily for health care and other public programs.

SEIU United Healthcare Workers West sponsors Proposition 40. Supporters include U.S. Sen. Bernie Sanders of Vermont, U.S. Rep. Ro Khanna of California and the California Democratic Party. Gov. Gavin Newsom opposes the measure.

How another proposition could override it

Propositions 41 and 42 contain competing provisions that could prevent Proposition 40 from taking effect. If voters approve Proposition 40 but either competing measure receives more votes, Proposition 40 would be nullified. Its own competing-measure provision would nullify Propositions 41 and 42 if Proposition 40 receives more votes.

Building a Better California, a group established by Google co-founder Sergey Brin and former Google chief executive Eric Schmidt, sponsors Propositions 41 and 42.

Proposition 41 would require pre-election audits for ballot measures proposing special taxes after organizers report collecting 25% of the signatures needed to qualify. If such a measure reaches the ballot, the audit would appear in the voter information guide. Proposition 41 would also require audits every four years for certain new special taxes enacted after January 1, 2026, and restrict enforcement of taxes excluded from the state spending limit after that date.