Statewide proposition · November 3, 2026 California General Election
Prop 40: Imposes One-Time Tax on Certain Taxpayers.
Initiative Constitutional Amendment and Statute.[1] ·
Topics: taxes
Imposes 5% tax on certain taxpayers with assets over $1 billion; revenue primarily for health care. Exempts revenues from constitutional requirements for school funding and spending limit. [2]
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What a YES vote means
A YES vote on this measure means: The state would collect a one-time tax from billionaires equal to 5 percent of their wealth. [2]
What a NO vote means
A NO vote on this measure means: The state would not collect a one-time tax from billionaires equal to 5 percent of their wealth. [2]
Official argument in favor
Vote YES on 40 to tax billionaires. Trump slashed healthcare funding to pay for billionaire tax breaks, eliminating coverage for over a million Californians and doubling health insurance premiums for millions more. It’s time to make billionaires pay their fair share and stop sticking the middle class with the bill. [2]
Official argument against
Prop. 40 is a flawed, one-time tax scheme that hurts our economy, damages our state budget, and contains a loophole exposing all Californians to taxes we can’t afford—but does nothing to lower healthcare costs. No safeguards, no accountability. Join California Teachers Association, California Medical Association, California Children’s Hospital Association, California Professional Firefighters, State Building and Construction Trades Council of California, Democrats and Republicans: NO on 40. [2]
Supporters
US Senator Bernie Sanders; SEIU United Healthcare Workers West [2]
Opponents
California Primary Care Association; California School Boards Association; California Taxpayers Association [2]
Both arguments are printed word for word from the official voter guide's summary page, in the same layout. ThinkBallot does not edit or rank them.
Read the full arguments and rebuttals.
Fiscal effect
Temporary revenue increase of tens of billions of dollars spread over several years from wealth tax on billionaires. Possible ongoing decrease of less than $1 billion per year in income tax revenue from billionaires. [2]
Analysis by the Legislative Analyst (the nonpartisan Legislative Analyst's full explanation)
BACKGROUND
California Is Home to Many Billionaires. Several of the wealthiest people in the world live in California. Wealth is the value of all the things a person owns. Wealth is different from income, which is how much a person earns in a set period of time, like one year. A person’s wealth typically is measured by their net worth. A person’s net worth is the value of all the things they own, like stocks, businesses, or other investments, minus their debts. California is home to a few hundred people with net worth over $1 billion, often called billionaires. Many of these billionaires gained their wealth as executives or investors in California technology companies.
Health Care Is a Major Category of State Spending. The state and federal government spend over $200 billion per year on state health care programs. Most state health care spending is for Medi-Cal, the state’s health insurance program for low-income people. State spending also supports public health programs, mental health care, and drug and alcohol treatment.
PROPOSAL
Establishes One-Time Wealth Tax on Billionaires. Under Proposition 40, billionaires who were residents of California on January 1, 2026 would have to pay a one-time state tax equal to 5 percent of their net worth. The tax would be due in 2027. Taxpayers would have the option to spread the payments over five years but would have to pay more to do so. Real estate, pensions, and retirement accounts generally would be excluded from the tax.
Most of the Money Must Be Spent on Health Care. The state would decide how and when to spend the money from the wealth tax, but it would have to be spent on certain types of services. Ninety percent of the money would have to be spent on health care services for the public. The rest would have to be spent on education, food assistance, and administration of the wealth tax. Existing rules in the State Constitution that limit spending and require the state to spend a certain amount on schools and community colleges would not apply to this money.
FISCAL EFFECTS
Temporary State Revenue Increase From Wealth Tax. The state probably would collect tens of billions of dollars from the wealth tax. This temporary increase in state tax collections would be spread across several years. Exactly when and how much the state would collect is very hard to predict for many reasons. For example, it is hard to know what actions billionaires would take to reduce the amount of tax they pay. Also, much of the wealth is based on stock prices, which are always changing.
Possible Ongoing Decrease in State Income Tax Revenues. California billionaires, like all those earning money in the state, currently pay state taxes on their annual income. Billionaires may respond to a new wealth tax in ways that reduce their income tax payments. For example, some billionaires may decide to leave California. The income taxes they currently pay to the state also would go away. These responses probably would reduce state revenues by less than $1 billion per year. This could mean less money for the state’s General Fund, which is the account that pays for most public services, including education, health care, and prisons.
State Costs to Administer the Wealth Tax. The state would have costs to determine how much wealth tax is owed and to collect tax payments. These costs could be tens of millions of dollars per year for several years. These costs would be paid from the new wealth tax revenues.