Prop. 40 explained: One-time 5% tax on billionaires

SAN JOSE - Proposition 40 is a citizen initiative that would impose a one-time 5% tax on the net worth of billionaires who lived in California on Jan. 1, 2026.  Net worth is the value of everything a person owns minus what they owe.

What it would do

According to the Legislative Analyst's Office (LAO), the tax would be due in 2027, and taxpayers could choose to spread payments over five years at an added cost.  Real estate, pensions and retirement accounts would not count toward the tax.  About 90% of the money would go to health care, and the rest to education, food assistance and administration.

The money would not count toward Proposition 98, the state's school-funding guarantee, or the state spending limit.

Who would be affected

Supporters say about 200 billionaires would owe the tax.  Hospitals, clinics and patients who depend on public health programs would receive most of the money.

What it would cost

The LAO estimates the tax would raise tens of billions of dollars over several years.  It also says some billionaires could leave the state, which could reduce ongoing state income-tax revenue, possibly by less than $1 billion a year.

Supporters and why

Supporters include Sen. Bernie Sanders of Vermont and SEIU-United Healthcare Workers West, a health care workers union.  They say federal health cuts make new money necessary.

"Prop. 40 makes approximately 200 California billionaires pay a modest, one-time tax on their global wealth to keep local hospitals and ERs open." - Argument in favor

Opponents and why

Opponents include the California Primary Care Association, the California School Boards Association and the California Taxpayers Association.  Their argument says the tax would "cost California $25 billion in lost revenue" for health care and education.

"When the money runs out, the politicians will be back with yet another tax." - Argument against Prop. 40

Where the parties stand

The California Democratic Party recommends yes; the California Republican Party opposes it.  Voters split by party:  in the IGS poll, 64% of Democrats and 6% of Republicans said yes.  PPIC found more than six in ten Democrats in support, compared with about four in ten independents and two in ten Republicans.

The money

The No campaign is led by Building a Better California, whose listed contributions include $17 million, four checks of $15 million, $12 million, $10.5 million, $9 million, $8.5 million and $7 million.  The same committee also funds campaigns for Props. 1, 37, 41, 42 and 45, according to state records.  The Yes side is funded by SEIU-UHW committees, with listed checks of about $1 million to $2.35 million.

Polling

In a Public Policy Institute of California (PPIC) survey of 1,086 likely voters taken Oct. 16-22 (margin of error plus or minus 3.8 points), 46% said yes and 52% no, down from 52% yes in September.  In a Berkeley Institute of Governmental Studies (IGS) Poll of likely voters taken Oct. 19-25 and released Oct. 29, 42% said yes, 50% no and 8% were undecided; IGS reported the No side up 8 points from 42% six weeks earlier.

"These results suggest that neither the advocates of the wealth tax nor those seeking to block future taxes have managed to persuade a majority..." - Eric Schickler, IGS co-director

Related measures

Opponents of Props. 41 and 42, which would void certain new taxes passed after Jan. 1, 2026, argue that each is designed to cancel Prop. 40.

What your vote means

A yes vote means billionaires would pay a one-time 5% tax, mostly for health care.  A no vote means they would not.

Source:  Secretary of State, Voter Information Guide, Prop. 40; Legislative Analyst analysis, Prop. 40; Official arguments and rebuttals, Prop. 40; Secretary of State Quick Guide to Props, Prop. 40; California Democratic Party endorsements; California Republican Party endorsements; PPIC Statewide Survey, October 2026; Berkeley IGS Poll Release #2026-22