Even California Said No: Why Voters Rejected the Billionaire Tax, and Why the Facts Back Them

On a night when Democrats rolled up wins across the country, the most ambitious "tax the rich" idea on any ballot lost in the most Democratic big state in America.

California voters rejected Proposition 40, a constitutional amendment that would have imposed a one-time 5% tax on residents and trusts holding more than $1 billion in assets, The Daily Wire and Yahoo Finance reported. The measure would have reached about 200 billionaires and measured residency as of Jan. 1, 2026, according to Yahoo Finance. The nonpartisan Legislative Analyst's Office said the tax could be paid over five years, at a higher total cost, and that 90% of the money would go to health care.

The measure was backed by a major health-care workers union and by national progressives including Sen. Bernie Sanders, Rep. Ro Khanna and Sen. Chris Murphy, The Daily Wire reported. Supporters presented it as a fair, one-time contribution from people who have done extraordinarily well, to shore up health care for working families.

That argument has emotional pull. It also ran into a wall of facts, and a surprising number of Democrats saw it. Gov. Gavin Newsom opposed the measure, according to The Daily Wire and Yahoo Finance.

California already leans heavily on a tiny group of taxpayers. The state's top 1% paid nearly 37% of all personal income taxes in 2023, down from 50% in 2021, according to the state Department of Finance, and personal income tax provides nearly 60% of the state's general fund. Capital gains made up just 10% of income tax liability in 2023, compared with 25% in 2021.

Those numbers describe a budget that rides a roller coaster tied to the stock market and the fortunes of a few thousand households. A wealth tax would have deepened that dependence, and made the state's finances hostage to whether its richest residents stayed.

And many did not wait to find out. Google co-founder Larry Page moved his base to Florida, Peter Thiel's firm opened a Miami office and he registered to vote in Florida, and investor David Sacks moved from San Francisco to Austin, the New York Post reported. The LAO estimated that the tax would raise "probably tens of billions of dollars" over several years, and it put the income tax lost from departures at probably under $1 billion a year. Every dollar of a one-time windfall would have been weighed against wealth, businesses and tax payments that simply left.

Wealth taxes are not a new idea. Europe tried them and backed away. Twelve countries in the OECD had net wealth taxes in 1990, and by 2017 only four did, the organization reported, noting that repeals were often justified on grounds of efficiency and administrative difficulty. Valuing privately held companies, art and other assets every year is costly and contentious, and mobile capital tends to go where it is treated well.

Proposition 40 also raised basic questions of fairness. It reached back to set residency on Jan. 1, 2026, roughly 10 months before anyone voted on it. Rep. Kevin Kiley, a California Republican, argued that states should not be able to tax people who no longer live there, The Daily Wire reported. Americans have a constitutional right to travel and to move between states, and a tax designed to follow people out the door tests the limits of that freedom.

There is a moral dimension, too. Scripture calls every one of us to generosity, and many of America's wealthiest families give enormously through churches, hospitals and charities. But generosity is a virtue of the heart. A government that treats success as a resource to be seized, rather than a blessing to be stewarded, should not be surprised when the people who create jobs choose to build them somewhere else.

Voters did. So did Newsom, and much of California's technology industry; Yahoo Finance reported that Google co-founder Sergey Brin gave a reported $102 million to the campaign against it.

The left is not giving up. Yahoo Finance noted that other "tax the rich" measures succeeded this year, including California's Proposition 3, which makes higher rates on incomes from $250,000 permanent. Expect the billionaire tax to return in a new form.

When it does, Californians should remember what they learned this year: a state cannot tax its way to prosperity by chasing away the people who pay the bills. The voters of America's bluest big state just said so themselves.