LOS ANGELES—California voters rejected a proposed billionaire tax, ending a heated and expensive fight over what could have been the nation’s first modern tax on wealth.
The Associated Press called the race Monday as the ballot initiative, Proposition 40, was trailing after last week’s election. Proposed by a healthcare-workers’ union , the initiative sought to impose a one-time, 5% tax on the net assets of California residents worth more than $1 billion at the end of this year. The union had estimated the tax would raise $100 billion over five years to offset looming Medicaid cuts that President Trump signed into law last year. Dave Regan, the union’s president, vowed to put a billionaire tax back on the ballot in 2028 if lawmakers in Sacramento don’t come up with a solution to the healthcare cuts by then.
The outcome is a significant blow to supporters who had hoped to create a template for taxing wealth that could extend far beyond California. It also leaves the state’s next governor, Democrat Xavier Becerra, with a major budget problem. Some of that funding went toward two ballot measures aimed at undermining the billionaire tax: one aimed at adding new spending rules and audit requirements, the other on banning wealth taxes. Prop.
40 was a “reckless experiment conducted on our state’s economy with little regard for the harms it would cause,” the antitax campaign said. The campaign said California is facing “enormous pressure” because of the looming healthcare cuts, and wants to work with Becerra and others on “more thoughtful” solutions. “That is our plan,” Regan said. “We will build on the coalition that brought us here, we welcome more stakeholders to the process, and we’ll put forward a proposal informed by everything that we’ve learned in this campaign.”
