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California voters have rejected Proposition 40, a proposed one-time 5 percent tax on the state's billionaires, with 52.8 percent voting no and 47.2 percent voting yes, according to the Associated Press, which called the race on Monday, nearly a week after the November 3 election.
The measure would have imposed a one-time tax equal to 5 percent of the net worth of Californians worth more than $1 billion who were residents of the state on January 1, 2026, with payment due in 2027. Real estate, pensions and retirement accounts were generally excluded. Supporters said it would have raised about $100 billion, most of it for health care, with the rest for education and food assistance, and that it would have applied to roughly 200 to 250 billionaires. California will not become the first state to levy a wealth tax on its richest residents, at least not in this election.
The campaign broke spending records. Opponents, led by the committee Building a Better California, spent a collective $378.4 million to defeat the measure, while supporters raised about $32 million. Google co-founder Sergey Brin alone gave more than $100 million to the opposition. Supporters, led by the health care workers' union SEIU-United Healthcare Workers West, which put the measure on the ballot, argued billionaires should contribute more to fund health care, education and food assistance, particularly after federal funding cuts. Opponents, including wealthy business leaders, warned the tax would drive billionaires and their businesses out of California, hurting investment, jobs and future tax revenue.
The result split Democrats. Governor Gavin Newsom opposed the tax, arguing billionaires would dodge it and leave the state, while Senator Bernie Sanders campaigned in support and the California Democratic Party backed the measure. Dave Regan, president of SEIU-UHW, said the union would try again at the ballot in 2028 if the Legislature "fails to deliver a real solution" to fund health care.
Voters also rejected Proposition 44, a union-backed measure on how clinics spend money. A rival measure, Proposition 42, which would write a ban on new wealth taxes into the state constitution, was leading with 51.6 percent but had not yet been called. The final count is still to come, and the state must certify the November 3 election by December 11.