California Voters Reject Ballot Measure to Impose Wealth Tax on Billionaires

California voters have rejected Proposition 40, a ballot initiative that would have imposed a one-time 5 percent tax on the wealth of residents with a net worth exceeding $1 billion.

The Associated Press projected the measure’s failure after counting votes from the midterm election, confirming that the proposal to tax assets such as shares and bonds did not pass.

The outcome represents a major test for wealth tax proposals in the United States, which supporters have long championed as a mechanism to raise revenue from the ultra-wealthy.

“The way this system works is they can literally create gigantic fortunes without paying tax,” said Tom Steyer, an investor and former gubernatorial candidate who supported the measure.

Proponents estimated the tax would have generated $100 billion, primarily to backfill federal healthcare funding cuts. Ten percent of the revenue was earmarked for education and food-assistance programs.

The campaign against the measure was heavily funded by tech leaders and billionaires, who contributed over $300 million to defeat the initiative through a political action committee.

“The disparity in money in this thing was too high,” said Cooper Teboe, a political strategist in Silicon Valley. “There was a genuine marketing gap.”

Google co-founder Sergey Brin was among the most prominent financial backers of the opposition, contributing more than $100 million to efforts aimed at blocking the wealth tax.

California Governor Gavin Newsom opposed the proposal, warning that it could damage the state’s economy and encourage wealthy residents to relocate, thereby reducing future income tax revenue.

“A lot of confusion and a lot of second-guessing among people who really in their hearts know what the right the thing to do is,” said Dave Regan, head of the union that led the campaign.

While supporters argued the tax was a necessary correction, critics contended it would force founders to sell private company equity and discourage new startups from entering the state.

Regan, who serves as president of the Service Employees International Union-United Healthcare Workers West, pledged to pursue a billionaire tax initiative again in 2028.