Why Many Billionaires Are Fighting California's Proposition 40

Many billionaires across the political spectrum oppose California's Proposition 40, a proposed one-time tax on the net worth of the state's billionaires. Net worth is total assets minus total debts. The measure would impose a 5 percent tax on the net worth of billionaires living in California on January 1, 2026, according to the Legislative Analyst's Office. The levy would apply to worldwide net worth, not just assets held in the state. Reuters has estimated that 200 to 250 billionaires would be affected by the 5 percent rate.

The mechanics matter here. A one-time levy on a stock of wealth works differently from an annual tax on income or holdings. It is closer to a single bill for everything you own on one day. The taxpayer must produce 5 percent of net worth at one point in time. For owners whose wealth sits in private companies, real estate, or thinly traded positions, that valuation is where most of the friction lies. Thinly traded assets change hands rarely, so their prices are hard to pin down. Proponents and opponents will fight over the appraisal process as much as the rate.

Opponents argue that the tax will push the ultrawealthy to leave California. That argument carries the most weight with a Proposition 40 critic in Washington. Rep. Kevin Kiley introduced legislation that would prohibit any state from imposing a retroactive tax, meaning one that reaches back to a past period, on the assets of individuals who no longer live in the state.

In my view, a measure aimed at departed residents would reach the exact scenario opponents describe. A federal prohibition of that kind would bear directly on how a measure like this could be enforced against people who relocate.

The money behind the opposition is substantial. Politico reported that more than 70 current and former California billionaires contributed a record $612 million to California's 2026 state elections.

In my view, a sum of that size shows how seriously the wealthy are treating the measure. It also shows that the fight over Proposition 40 is being waged with capital, not just with ballot arguments.

Voter sentiment is less one-sided than the spending suggests. An October 2026 UC Berkeley and Los Angeles Times poll found that 50 percent of likely voters oppose Proposition 40's one-time billionaire tax. A result of half the electorate leaves plenty of room in either direction.

In my view, the undecided share is where campaigns typically concentrate their money.

California is not alone in looking at its richest residents. France's 2026 budget proposal includes a 2 percent wealth tax on the richest 0.01 percent, as Reuters reported. The French design is annual and targets a far smaller group at a lower rate.

The broader context here is that wealth taxation is being revisited in several large economies at once. The French case is not a template for what California would collect.

In my view, for ordinary savers and investors, the near-term question is less about the rate than about whether the measure passes and, if it does, how the valuation and residency rules are written and litigated. Those details will decide who pays and when. Until voters act, Proposition 40 remains a proposal.