Proposition 40: Imposes One-Time Tax on Certain Taxpayers

CalMatters' 2026 voter guide entry for Proposition 40. It describes the one-time 5% tax on the estimated 200 Californians worth over $1 billion at the start of 2026, reports SEIU-UHW's projection of roughly $100 billion over five years, summarizes each side's case, lists endorsements and media endorsements, reprints the ballot label, and notes the measure would be nullified if Proposition 41 or 42 earns more votes.

• Proposition 40 would require about 200 Californians worth over $1 billion at the start of 2026 to pay a one-time 5% tax, earmarked mainly for health care with some for food assistance and education.
• SEIU-UHW, which put the measure on the ballot, projects about $100 billion over five years.
• Supporters argue the taxpayers benefited most from recent federal tax changes while Congress cut tens of billions from Medicaid; SEIU-UHW argues the cuts will close hospitals and clinics.
• Opponents, including Silicon Valley entrepreneurs, business interests, and some health and labor groups, say billionaires will leave and long-run revenue will fall; health groups say they were not consulted and that it does not solve long-term health funding.
• CalMatters says the opposing health groups backed Propositions 41 and 42, competing measures limiting new special taxes, and that if either gets more votes Proposition 40 would be nullified.
• Media endorsements listed: The Sacramento Bee, The San Diego Union-Tribune, The Orange County Register, and the Los Angeles Times; the linked Union-Tribune, Register, and Times editorials are titled as no recommendations.

The Proposition 40 pages of the official state voter guide (pages 54-55): the Attorney General's official title and summary and the Legislative Analyst's analysis. The title and summary describes a one-time tax of up to 5% on certain taxpayers with covered assets over $1 billion, a 90/10 split of revenue between health care and food assistance or education, and an exemption of the revenue from constitutional school-funding, reserve, and spending-limit rules. The LAO portion explains the tax, its fiscal effects, and a possible interaction with Propositions 41 and 42. It refers readers to page 134 of the guide for the full text, which is not included here.

• Attorney General's summary: one-time tax of up to 5% on certain taxpayers with covered assets valued over $1 billion; covered assets include businesses, securities, art, collectibles, and intellectual property, but exclude real property and some pensions and retirement accounts.
• Revenue allocation per the summary: 90% for health care, 10% for food assistance or education-related programs; the revenue may not replace existing funding for those purposes.
• The revenue would be exempt from constitutional requirements for school funding, budget reserves, and the state spending limit.
• LAO: billionaires who were California residents on January 1, 2026 would owe a one-time tax equal to 5% of net worth, due in 2027, with an option to pay over five years at extra cost; real estate, pensions, and retirement accounts generally excluded.
• LAO fiscal estimate: a temporary revenue increase probably totaling tens of billions of dollars over several years; a possible ongoing income tax revenue decrease of less than $1 billion per year; administrative costs possibly tens of millions of dollars per year for several years, paid from the tax revenue.
• LAO: if Proposition 41 or 42 receives more yes votes than Proposition 40, Proposition 40 could be stopped from becoming law even with majority approval, because courts could find the measures conflict.

A three-page PDF of the Legislative Analyst's Office analysis of Proposition 40 for the November 3, 2026 ballot. It covers background on California billionaires and health care spending, the proposed one-time 5% wealth tax, the 90% health care allocation, the LAO's fiscal estimates, the yes/no statement, and the ballot label fiscal impact. Unlike the LAO web page and voter guide versions, this PDF contains no section on interactions with Propositions 41 and 42.

• One-time state tax equal to 5% of net worth for billionaires resident in California on January 1, 2026, due in 2027, payable over five years at extra cost.
• Real estate, pensions, and retirement accounts generally excluded.
• 90% of revenue to health care services; the rest to education, food assistance, and tax administration; constitutional spending-limit and school-funding rules would not apply.
• Fiscal estimate: tens of billions of dollars over several years; possible ongoing income tax loss of less than $1 billion per year; administration costs of tens of millions of dollars per year for several years.
• This version does not discuss Propositions 41 or 42.

The Secretary of State's official voter guide landing page for Proposition 40. It gives the official summary (a 5% tax on certain taxpayers with assets over $1 billion, revenue primarily for health care, exempt from constitutional school-funding and spending-limit requirements), the fiscal impact line, what yes and no votes mean, short pro and con arguments written by the campaigns, lead supporters and opponents, and campaign contacts. The full analysis, arguments, and text of the proposed law are not on this page.

• Summary: imposes a 5% tax on certain taxpayers with assets over $1 billion; revenue primarily for health care; revenue exempt from constitutional school-funding requirements and the spending limit.
• Fiscal impact: temporary revenue increase of tens of billions of dollars over several years; possible ongoing income tax decrease of less than $1 billion per year.
• Placed on the ballot by petition signatures.
• Supporters listed: U.S. Senator Bernie Sanders; SEIU United Healthcare Workers West. Opponents listed: California Primary Care Association; California School Boards Association; California Taxpayers Association.

The Legislative Analyst's Office web page with its official ballot analysis of Proposition 40. It explains what billionaire wealth is, describes the proposed one-time 5% tax on net worth of billionaires resident in California on January 1, 2026, says most of the money must go to health care, notes a possible interaction with Propositions 41 and 42, and gives the LAO's fiscal estimates. The text matches the analysis printed in the official voter guide.

• Billionaires resident in California on January 1, 2026 would pay a one-time tax of 5% of net worth, due in 2027, with an option to spread payments over five years at extra cost.
• Real estate, pensions, and retirement accounts generally excluded.
• 90% of the money must be spent on health care services; the rest on education, food assistance, and tax administration. Constitutional spending-limit and school-funding rules would not apply to this money.
• If Proposition 41 or 42 gets more yes votes, Proposition 40 could be stopped from becoming law even with majority approval.
• Fiscal estimate: temporary revenue of tens of billions of dollars over several years; possible ongoing income tax loss of less than $1 billion per year; administrative costs of tens of millions of dollars per year for several years.

The official text of Proposition 40. It imposes a one-time 2026 excise tax of 5% of worldwide net worth on individuals who were California residents on January 1, 2026 with net worth of $1 billion or more, and on certain trusts. It sets detailed valuation, debt, trust, and apportionment rules, an optional deferral account for illiquid taxpayers, strong anti-avoidance and enforcement powers, and expedited court review. Revenue goes to a special fund outside the General Fund and the Proposition 98 and Gann-limit formulas: 90% for health care, 10% for K-14 education and food assistance.

• Liability turns on residency on January 1, 2026; net worth (both spouses, worldwide) is measured December 31, 2026. The rate phases in between $1 billion and $1.1 billion.
• Payment with 2026 income taxes, or in five annual installments with a 7.5% annual nondeductible deferral charge; an Optional Deferral Account lets taxpayers whose tax exceeds their publicly traded assets defer tax on illiquid assets, taxed at 5% of later distributions, with duties continuing after they leave California.
• Excluded: directly held real estate, qualified pensions and IRAs, Roth accounts up to $10 million, and up to $5 million of other assets. Private businesses are presumed worth book value plus 7.5 times average book profits, rebuttable only by clear and convincing evidence.
• 100% of net worth is apportioned to California regardless of residency history; relief by petition is floored at 25% unless the Constitution or federal law requires less.
• Anti-avoidance: trust look-backs, charitable pledges and below-value transfers after October 15, 2025 disregarded, a 'substantial purpose' general anti-avoidance rule, a 10-year assessment window, and Franchise Tax Board power to seek trial de novo after losing at the Office of Tax Appeals. Board rules are exempt from the Administrative Procedure Act until 2028.
• Health account appropriations capped at $22.5 billion a year, education and food at $2.5 billion; the money may not supplant existing state funding. The tax is made nondeductible for state income tax.
• Facial challenges must be filed within 60 days in Sacramento County Superior Court, with direct appeal to the California Supreme Court. Courts are told to reform the tax's dates, preserving a 2026 or the earliest later tax year, if the dates are held invalid.
• The Legislature may amend by two-thirds vote if consistent with the Act's purposes. If this measure outpolls a conflicting measure on billionaire net-worth taxation, it prevails in its entirety.

A CounterPunch commentary by Chuck Collins of the Institute for Policy Studies, summarizing a report by IPS and Tax the Ultra-Rich Now that identifies 22 California billionaires it says are funding or speaking out against Proposition 40. It argues these opponents' wealth has grown far faster than the tax they would pay and that California billionaires pay low state income taxes relative to their wealth.

• The author says 22 California billionaires opposing the measure have given over $150 million to the opposition.
• He reports their combined wealth rose from $439.8 billion on January 1, 2025 to $722.1 billion on September 1, 2026, a gain of $282.6 billion, and says the tax would take about one-eighth of that gain.
• He names Sergey Brin as the largest opposition donor at over $102 million, and lists Peter Thiel ($3 million), Chris Larsen (over $5 million, plus $5 million from Ripple and $12 million to Building a Better California), and John Doerr ($10 million).
• He reports 231 California billionaires with combined wealth of $2.117 trillion as of September 1, 2026, up from 178 and $1.685 trillion twenty months earlier.
• Citing Zucman and Saez, he says California billionaires paid on average 0.26% of their wealth per year in state income taxes from 2019 to 2025.

A section-by-section plain-English summary of Proposition 40 prepared by its drafters and submitted as public testimony. It walks through each section of the measure, explains the drafters' intended meaning of key provisions, and argues that critics' differing readings rest on implausible interpretations. The drafters say they expect courts to rely in part on this summary if they find language ambiguous, and that some technical questions will be left to Franchise Tax Board guidance.

• Describes the tax as a one-time 5% excise tax for 2026 on the worldwide net worth of billionaires resident in California on January 1, 2026, measured December 31, 2026, payable at once or over five years with a deferral charge, plus optional deferral accounts for illiquid taxpayers.
• Says the Legislature's two-thirds amendment power (Section 50310) applies to the statutory provisions and, in the drafters' intent, cannot be used to make the tax continuing or extend it to non-billionaires, because the stated purpose is a one-time tax on billionaire wealth.
• Says filers who check the box affirming they are not billionaires face no further reporting, and that the Board is not required to audit them.
• Explains private-business valuation: (book value + 7.5 x average book profits) x ownership share, rebuttable by either side with a certified appraisal on clear and convincing evidence; control-rights presumptions do not apply to publicly traded companies.
• Explains exclusions: directly held real estate (to avoid double taxation with property tax), qualified pensions and Roth accounts up to $10 million, tangible property outside California 270+ days, and $5 million of miscellaneous assets.
• Says the general anti-avoidance rule lets the Board look through transactions, including residency changes, where a substantial purpose is avoiding the tax, which the drafters describe as broader than existing law.
• Says Propositions 41 and 42 are the only measures on the ballot that may conflict with Proposition 40 under its Section 8, and that Proposition 3 does not.

An NBER working paper (No. 35218, May 2026, revised August 2026) by Jasper Boll, Emmanuel Saez, and Gabriel Zucman documenting California billionaires' wealth and the taxes they pay, and estimating revenue from Proposition 40. The paper discloses that Saez provided unpaid expert advice on the design and scoring of the initiative. It estimates the one-time 5% tax could raise about $100 billion with comparatively minor effects on income tax revenue, and argues that a permanent annual wealth tax could also raise substantial net revenue.

• California's roughly 250 billionaires held about $2.3 trillion as of July 1, 2026; their wealth grew 144% from the end of 2022 to the end of 2025.
• The authors estimate California billionaires pay about 0.2% of their wealth per year in California income tax (about $3.2 billion a year, 2.4% of state income tax revenue), and about 1.1% of wealth in all taxes at all levels.
• For the top four (Page, Brin, Zuckerberg, Huang), they estimate state income tax of 0.07% of wealth a year on company wealth, and say Page and Brin paid no California income tax on Alphabet wealth in 2019, 2020, and 2023.
• They estimate the one-time 5% tax could raise about $100 billion and argue that because billionaires pay little income tax, even large departures would cost little income tax relative to the wealth tax.
• They argue the January 1, 2026 residency date, about a month after the final text was published on November 26, 2025, made it very difficult to change residency in time, citing tax attorneys' skepticism.
• They criticize the Rauh et al. (2026) scoring for assuming permanent mobility responses to a one-time tax, which they call the main driver of its negative estimate.
• They report that California startups' share of U.S. equity investment rose to 81.6% in the first half of 2026, which they say shows the initiative has not discouraged investment.

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An August 2026 report by the California Budget & Policy Center explaining Proposition 40: who would pay, how net worth is calculated, revenue estimates, how the money could be spent, its likely effects on Californians affected by federal health and food cuts, concerns about the measure, and how Propositions 41 and 42 conflict with it. The Budget Center states that it does not endorse or oppose ballot measures; the report presents both the rationale for taxing wealth and the risks of a one-time, earmarked, state-level tax.

• Describes a one-time 5% tax on worldwide wealth of individuals, married couples, and trusts over $1 billion, phased in between $1 billion and $1.1 billion; the Center counts around 250 California billionaires with over $2 trillion in wealth.
• Compares revenue estimates: LAO 'tens of billions'; the measure's authors about $100 billion over five years assuming 10% erosion; Hoover researchers about $40 billion initially. The Center attributes the gap mainly to assumptions about how many billionaires sever California residency.
• Says the measure gives policymakers broad discretion within the health and education/food categories, and that the education and food account could go entirely to one purpose.
• Notes the revenue is excluded from Proposition 98, Proposition 2 reserve and debt rules, and the Gann limit, so schools would get less than if the money went to the General Fund.
• Raises concerns: one-time money for ongoing federal cuts, earmarking that excludes other needs such as housing and child care, and uncertain long-run effects on income tax revenue and the economy.
• Reviews migration research, finding small effects for state income taxes but larger estimated effects from subnational wealth taxes in Spain and Switzerland, with caveats about applying them to California.
• Explains that Proposition 41 (Gann limit for new special taxes) and Proposition 42 (ban on new taxes on financial assets and on retroactive taxes) conflict with Proposition 40 and could invalidate it if they receive more votes.

A CalMatters guest commentary by Ahmad Thomas, CEO of the Silicon Valley Leadership Group, opposing Proposition 40 and urging support for Propositions 41 and 42. CalMatters frames it as one of two paired pieces, with a nurse arguing the opposing view. Thomas argues the one-time tax trades dependable recurring revenue for a temporary infusion and would tax unrealized business value, encouraging founders and companies to leave.

• Thomas says the health care and Medi-Cal funding needs are real but that Proposition 40 is the wrong way to address them.
• He cites the LAO's estimate of tens of billions of dollars in near-term revenue and calls it a 'sugar high', pointing to the LAO's projected ongoing income tax decrease if taxpayers leave.
• He argues the tax would apply to the estimated value of businesses and ideas before they are sold or profitable, giving founders of research-heavy firms tax bills without cash to pay.
• He urges a yes vote on Proposition 42, which he says would bar new state taxes based on ownership of financial assets, business interests, and intellectual property and prevent certain retroactive taxes, and on Proposition 41, which he says would add review and auditing of special taxes.

The Hoover Institution's 'California Decides' Proposition Lab guide to Proposition 40. It describes the measure's mechanics, quotes its key language, presents a proponents' case and an opponents' case, and then gives Hoover's own assessment, which concludes that the measure could raise short-run revenue but leave California with a net long-run loss of at least $25 billion once lost income taxes from departing billionaires are counted. It also flags constitutional and administrative challenges.

• Describes the tax: 5% of total net worth for residents worth $1 billion or more, phased in between $1.0 and $1.1 billion; residency fixed January 1, 2026, net worth measured December 31, 2026; payable in full or in five installments with a 7.5% annual charge.
• Notes exclusions for directly held real estate, pensions and traditional retirement accounts, Roth accounts up to $10 million, and up to $5 million of art, cars, and personal property; revenue goes to a reserve fund outside the Gann limit, Proposition 98, and rainy-day rules.
• Says every California income tax filer, more than 19 million, would have to declare whether their net worth exceeds $1 billion.
• Hoover research estimates about $40 billion collected over five years in the best case, versus proponents' $100 billion, and a net loss of at least $25 billion when lost income tax revenue is counted.
• Says at least six billionaires, including Sergey Brin and Larry Page, publicly left California before January 1, 2026, removing roughly $536 billion, close to 30% of the tax base.
• Flags Section 50310, which lets the Legislature amend the act by two-thirds vote, as allowing changes to the threshold, rate, and one-time nature; and flags Commerce Clause and Supremacy Clause risks to the 100% apportionment default.

The official ballot arguments for and against Proposition 40, with rebuttals, as printed on pages 56-57 of the state voter guide. Supporters (SEIU-UHW, a Planned Parenthood of Pacific Southwest employee, and an AFT Local 1521 member) argue the tax on about 200 billionaires would raise about $100 billion to replace federal health care cuts. Opponents (the California Medical Association, California Primary Care Association, and California School Boards Association, with rebuttal signers from CTA, CalTax, and the State Building Trades) argue it would cost the state $25 billion in lost revenue, lets the Legislature amend it without voter approval, taxes retirement accounts, and lacks accountability. The page states that the arguments have not been checked for accuracy by any official agency.

• Supporters say the measure would make about 200 California billionaires pay a one-time tax on global wealth and raise about $100 billion for health care, schools, and food assistance.
• Supporters say billionaires pay lower tax rates than working families and that the tax cannot be applied to anyone but billionaires.
• Opponents cite a Stanford study they say finds the tax would cost California $25 billion as companies and wealthy residents leave.
• Opponents say the measure lets the Legislature amend it without voter approval and that independent legal analysis found it opens the door to taxing all Californians' assets.
• Opponents say it would be the first California tax on retirement accounts, exempts itself from school-funding guarantees (shortchanging schools over $3 billion a year, they say) and the state spending limit, and has no safeguards against money going to health insurers.
• Opponents say Governor Gavin Newsom and the Democratic and Republican candidates for governor oppose it; supporters list the California Nurses Association, Rep. Ro Khanna, SEIU, LULAC, and CLUE among backers.

The League of Women Voters of California's recommendations for the November 3, 2026 propositions. On Proposition 40 the League takes a neutral position, explaining that it has strong positions on both sides: it supports taxing extreme wealth to meet urgent safety-net needs but says the one-time, earmarked structure conflicts with principles of sound public finance and risks long-term revenue loss. The page also explains how Propositions 41 and 42 could prevent Proposition 40 from taking effect; the League's recommendations on 41 and 42 are not legible in the extracted text.

• LWVC position on Proposition 40: neutral.
• In favor, the League says the state has a responsibility to step in as federal health and food funding is cut, and that the measure could deliver tens of billions to the safety net.
• The League says the wealthiest households pay a lower total effective tax rate than the population as a whole, and that inequality on this scale warrants serious consideration of wealth taxes.
• Against, the League says the measure makes budget decisions at the ballot box by locking proceeds into an earmarked fund, and that a one-time tax is only a stopgap for programs that need yearly funding.
• The League says six billionaires reportedly left the state before the January 1, 2026 cutoff, potentially erasing more than a quarter of proponents' projected $100 billion, and notes the official estimate is tens of billions and highly uncertain.
• On Propositions 41 and 42, the League says each is designed to prevail over a conflicting measure, so if either passes with more yes votes, courts could find a conflict and prevent Proposition 40 from becoming law.

The Secretary of State's page of reported contribution totals for committees formed to support or oppose Proposition 40, current through October 22, 2026. Support committees reported $33,413,577 in total; opposition committees reported $130,344,804.

• Support total: $33,413,577 across two committees, almost all from the SEIU-UHW-sponsored Yes on 40 committee ($32,932,998).
• Opposition total: $130,344,804 across four committees, led by 'No on Prop 40 - Doctors, Teachers, Small Businesses, Working Families and Public Safety Against the Reckless Wealth Tax Experiment' ($118,739,982).
• Other opposition committees: Golden State Promise ($10,450,000), Californians Against Tax Increases sponsored by the California Business Roundtable ($754,822), and Stop the Squeeze ($400,000).
• The page notes that committees raising $1 million or more must report their top 10 contributors.

An Associated Press report, published by Spectrum News 1, on the coalition opposing Proposition 40, which it says includes Gov. Gavin Newsom, Planned Parenthood, the California Teachers Association, most Republicans, and tech investors who supply most of the money. It reports fundraising and ad spending on both sides, a September PPIC poll, opponents' and supporters' arguments, a Cornell sociologist's view, and allegations against the SEIU-UHW president.

• AP reports opponents have raised more than $300 million, nearly a third from Sergey Brin, about 10 times the yes side; the yes campaign has raised $32.4 million and Tax the Ultra-Rich Now about $369,000.
• A September PPIC poll found 52% of likely voters would vote yes and 46% no, per AP.
• AdImpact data cited by AP show opponents spending or booking about $96 million in ads versus $209,000 by supporters.
• AP says the measure would be the nation's first tax on billionaires' wealth; 90% of revenue to health care, the rest to education and food assistance.
• AP reports Brin and Larry Page began cutting ties with California in anticipation of the tax, and that Newsom opposes the state measure while calling for a national billionaire tax.
• AP reports SEIU-UHW President Dave Regan was accused of harassing female colleagues and threatening union leaders; Regan called the allegations a distraction.

A KQED news report by Izzy Bloom and Guy Marzorati on the California Democratic Party executive board's endorsement of Proposition 40, which passed narrowly at 61.7% against a 60% threshold, putting the party at odds with Gov. Gavin Newsom. It reports reactions from both sides, a May PPIC poll, opposition spending, and the party's vote to oppose Propositions 41 and 42.

• The party's executive board, meeting in San Diego, endorsed Proposition 40 with 61.7% after a first vote fell short at 59.2%; a motion to take no position also failed.
• SEIU-UHW President Dave Regan called it a sign Democrats are united; San Francisco Democratic Party chair Nancy Tung said the vote barely passed and did not show overwhelming support.
• Supporters named include Rep. Maxine Waters, Sen. Bernie Sanders, and Rep. Ro Khanna; opponents named include Newsom, gubernatorial candidate Xavier Becerra, and the California Teachers Association.
• A May PPIC poll cited by KQED found 54% of likely voters and 76% of Democrats would vote yes.
• KQED reports the opposition, including Sergey Brin, had already spent more than $100 million; the party also voted to oppose Propositions 41 and 42, which KQED says Brin funded and which are seen as poison-pill attempts to undercut Proposition 40.

The full text of Initiative 25-0024 as amended (Amendment 1), the 2026 Billionaire Tax Act, submitted to the Attorney General on November 24, 2025 by proponent Suzanne Jimenez, with a cover letter. It contains findings, purpose, a constitutional amendment (Article XIII, Section 37) authorizing a one-time tax on billionaire wealth and creating a special Reserve Fund, Government Code provisions allocating the money, and a new Part 27 of the Revenue and Taxation Code setting out the tax, net-worth rules, an optional deferral account, appraisals, apportionment, penalties, anti-avoidance rules, expedited judicial review, a conflict clause, and proponent standing.

• Imposes an excise tax for tax year 2026 of 5% of net worth on California residents (as of January 1, 2026) with net worth of $1 billion or more, and on applicable trusts; net worth is measured December 31, 2026. The rate phases in between $1 billion and $1.1 billion.
• Taxpayers may pay with their 2026 income taxes or in five annual installments with a 7.5% annual nondeductible deferral charge on the unpaid balance; illiquid taxpayers may use an Optional Deferral Account that taxes later distributions at 5%.
• Directly held real property, qualified pensions and IRAs, Roth accounts up to $10 million, and up to $5 million of other assets such as art and collectibles are excluded; private business interests are presumed valued at book value plus 7.5 times average book profits.
• Revenue goes to a special Reserve Fund outside the General Fund: 90% to a health account and 10% to an education and food assistance account, with appropriation caps of $22.5 billion and $2.5 billion a year and a non-supplantation rule.
• The revenue is exempted from the Article XIIIB spending limit and the Proposition 98 school-funding rules (Sections 8 and 8.5 of Article XVI).
• The Legislature may amend the Act by two-thirds vote if consistent with its purposes; validation challenges must be filed within 60 days in Sacramento County Superior Court with direct appeal to the Supreme Court.
• Section 8 says that if this measure gets more votes than a conflicting measure on net-worth taxation of billionaires, this measure prevails entirely.