Record Spending in California Wealth Tax Fight
More than $351 million has been poured into the battle over Proposition 40, a proposed one-time 5% wealth tax on California billionaires, making it one of the most expensive ballot measure campaigns in state history. About 90% of that money is being spent to defeat the initiative, according to the Los Angeles Times, with ultra-wealthy Californians bankrolling a multifaceted opposition effort.
"The pro-40 campaign picked a fight and then came to that fight with a butter knife against a nuclear arsenal," said GOP strategist Rob Stutzman, who is not involved in the campaigns. He noted that the opposition's massive funding allows it to "show up everywhere from network TV to inside video games."
The measure, backed by the Service Employees International Union-United Healthcare Workers West, would levy a one-time 5% tax on the assets of California billionaires who lived in the state as of January 1, 2026. Supporters say it would raise $100 billion to fund the state's healthcare system amid federal Medicaid cuts. Two related measures, Propositions 41 and 42, could nullify Prop 40 if they receive more votes.
Polls Show Tight Race Despite Ad Blitz
Despite the spending disparity, recent polling suggests the race remains close. According to Politico data cited by Reason, 46% of likely voters favor Prop 40 and 43% oppose it. Notably, 84% of registered voters said they had seen advertisements about the tax, but a 45% plurality said the messaging had not swayed them.
Billionaire Flight and Revenue Questions
The stakes extend beyond California's borders. Seven billionaires—including Peter Thiel, Larry Page, and Sergey Brin—left the state before January 1, 2026, when news of the possible tax broke, representing about 30% of the state's billionaire wealth. Economist Gabriel Zucman argues that even with this flight, revenue estimates could reach $115 billion when including less-prominent billionaires. Critics, however, question whether those billionaires would remain.
"Either the tax is annual—and in that case it generates revenue annually, and some billionaires leave," Zucman told Reason. "Or the tax is one-time—in that case it generates revenue in just one year, and there is no incentive to leave. It can't be both at the same time." Reason's Liz Wolfe counters that billionaires have already left as soon as the idea was floated, undermining Zucman's assumption.
The revenue uncertainty is compounded by the structure of the ballot. Prop 40 will be nullified if either Prop 41 or Prop 42 receives more votes, while Prop 40 would nullify both if it wins. This esoteric tax law maneuvering has turned the election into a complex three-way contest.
Switzerland's Century-Old Wealth Tax Offers Contrast
As California debates its billionaire tax, Fortune reports that Switzerland has levied wealth taxes for over a century while continuing to attract millionaires. The number of Swiss adults with $5 million to $10 million in assets grew 7.4% annually from 2000 to 2025. Warren Gorlick, a retired Treasury policy adviser, noted in a Washington Post op-ed that Swiss wealth taxes are modest: a married couple in Zurich with $2.5 million in net worth pays an effective rate of just 0.24%, or about $6,000 annually. For someone with $1 billion, the effective rate is 0.7%, or $7 million a year—far below California's proposed 5% one-time levy.
Broader Implications for Tax Policy
The California vote, set for next week, is being watched nationally as a test case for wealth taxation. Supporters, including Sen. Bernie Sanders, have rallied behind Prop 40 as an economic reckoning. Opponents, heavily funded by the billionaires targeted by the measure, warn of capital flight and reduced investment.
The outcome could shape future tax debates in other states and at the federal level, where wealth taxes have gained political traction. With billions in advertising already spent and polls showing a dead heat, the final days of the campaign will determine whether California becomes the first state to impose a billionaire wealth tax—or whether the opposition's financial advantage carries the day.
As Stutzman noted, money does not guarantee a win: in California's most expensive ballot fight in 2022, $463 million was spent on two gambling propositions that both failed. Whether that precedent holds for Prop 40 remains to be seen.
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