California is set to hold a vote in November 2026 on Proposition 40, which would impose a one-time 5% tax on the wealth of the state's billionaires. If approved, this measure would mark the first instance globally of a tax specifically targeting billionaire assets. The revenue generated is intended to address significant funding cuts to California's Medicaid program enacted by Congress in 2025.
The initiative has sparked a fierce mobilization among the ultra-wealthy, particularly those based in Silicon Valley. Google co-founder Sergey Brin has already spent over $100 million in an effort to defeat the tax. Opponents argue against the measure, yet supporters contend that the state's extreme wealth concentration necessitates this intervention. Data indicates that ten years ago, the wealthiest 0.001% of California residents held a combined $700 billion; today, the state's 250 billionaires possess a collective $2.3 trillion, an amount equivalent to the entire annual income of all 20 million California taxpayers.
Proponents highlight that this wealth accumulation has been facilitated by loopholes allowing capital returns to compound while ordinary citizens pay higher rates. Between 2019 and 2025, billionaires paid only 1.6% of their $1.4 trillion wealth gain in state income taxes. A group of Economics Nobel Laureates, including Daron Acemoglu, Esther Duflo, Paul Krugman, and Joseph Stiglitz, have publicly endorsed Proposition 40. They argue that the tax would raise approximately $100 billion, matching the revenue a 5% income tax on all taxpayers would generate, while remaining modest relative to billionaire gains.
The tax would apply to billionaires residing in California as of January 1, 2026, closing the window for those attempting to avoid it by relocating shortly before the deadline. Contrary to claims that the tax would harm the tech sector, California has attracted 80% of all new venture capital funding in the United States since the beginning of 2026, up from roughly 50% prior to 2025. Nvidia CEO Jensen Huang, who would be subject to the tax, stated he would be "perfectly fine" with the measure.
Supporters view Proposition 40 as a critical opportunity to rein in billionaire power and fund essential public services like health, education, and infrastructure. They suggest that if California succeeds, it could trigger a broader movement to tax ultra-high-net-worth individuals in other states, at the federal level, and internationally.
Sources: netzpolitik.org.