Proposition 40 would have slapped a one-time 5% tax on the assets of roughly 260 California residents whose net worth exceeds $1 billion. Proponents promised $100 billion in revenue over five years. On Tuesday night, 55.6% of California voters said no.
This wasn't Texas. This wasn't Florida. This was the bluest state in the union telling the tax-the-billionaires crowd to find a new hobby.
The measure was bankrolled largely by Dave Regan, president of the Service Employees International Union-United Healthcare Workers, who poured $33 million into the "Yes on 40" campaign. Opponents — including the California Chamber of Commerce, Google co-founders Larry Page and Sergey Brin, Meta's Mark Zuckerberg, and Peter Thiel — spent north of $130 million to bury it. The Yes on 40 website complained that "billionaires like Sergey Brin and Peter Thiel are spending tens of millions in non-stop ads" to defeat the measure. They were. And it worked, because the argument on the other side was better.
The California Chamber of Commerce called the proposition an "unprecedented wealth tax" that "is not only misguided but creates a dangerous precedent." That's the polite version. The California Tax Foundation put numbers on it: a wealth tax would actually cut state revenue by $3.53 billion to $4.49 billion per year as billionaires simply packed up and left. The tax was projected to raise $20 billion a year. The exodus it triggered would erase a quarter of that before the ink dried.
Rep. Ro Khanna, the Democrat whose Silicon Valley district houses a good chunk of those 260 targeted billionaires, stayed conspicuously quiet on Prop 40 during the campaign. Representing the people who write the checks has a way of clarifying one's economic philosophy.
Californians didn't stop there. They also passed Proposition 42 by a 54.3% to 45.7% margin, which prohibits the state from imposing new property taxes. On the same night voters handed Democrats a national mandate, they drew a hard line at the wallet.
Regan told reporters his group plans to resurrect the bill in 2028. Same pitch. Same state that just rejected it by double digits. The California Tax Foundation research showing billions in lost revenue from billionaire flight isn't going anywhere either, but apparently the plan is to try the same experiment and expect a different result.
Every precondition the wealth-tax movement could have asked for was in place — Democratic enthusiasm, progressive turnout, a national mood favoring government intervention. The answer was still no.
Forty-four percent of California voters looked at "tax billionaires" and said yes. Fifty-five point six percent did the math.