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1Clear out junk files and repair common Windows errors2Fix the driver behind crashes, sound loss and screen glitches3Repair Windows errors before they cause bigger problemsCalifornia Proposition 40 is a proposed one-time tax on the net worth of billionaires who lived in the state on January 1, 2026. It is on the November 3, 2026 ballot, but is not law. The Legislative Analyst’s Office (LAO) estimates it could bring in tens of billions of dollars over several years, while warning that taxpayer responses could also reduce state income-tax revenue. Both the collections and the possible loss are uncertain.
What your vote means
The Secretary of State announced on June 17, 2026, that the initiative qualified for the November 3 general-election ballot after a random sample of petition signatures projected more than the required number of valid signatures. It was later designated Proposition 40. Voters have not approved it.
| Vote | What it would mean |
|---|---|
| Yes | Support the proposed constitutional amendment and statute imposing a one-time 5% tax on the net worth of qualifying California billionaire residents, with the revenue directed mainly to health care. |
| No | Reject the proposed tax and its specified revenue allocation. |
The official voter guide’s pro argument says the measure would make billionaires pay their “fair share” and help fund health care. The con argument says it could harm the economy and state budget and lacks adequate safeguards and accountability. Those are campaign positions, not the LAO’s fiscal estimate.
Who would pay, and how would the tax work?
Who qualifies
The proposal would apply to people who were California residents on January 1, 2026, and had net worth above $1 billion. The LAO describes net worth as the value of what someone owns—such as stocks, businesses or investments—minus debts. Its estimate that California has a few hundred residents above that threshold is a population description, not a count of people who would ultimately file or pay.
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Tax base, timing and exclusions
The tax would equal 5% of net worth and be due in 2027. A taxpayer could spread payments over five years at an additional cost; the proposal’s summary does not establish that cost as a single amount here. Real estate, pensions and retirement accounts generally would be excluded. This is a tax on accumulated net worth, not a 5% tax on annual income.
How much could Proposition 40 raise—and what is uncertain?
The LAO estimates that the measure would probably collect tens of billions of dollars, with receipts spread across several years. That is a forecast, not money already collected or a guaranteed total. The agency says the amount and timing are difficult to predict because relevant wealth—much of it tied to stock prices—can change, and taxpayers may take steps to reduce their liability.
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The LAO separately estimates that taxpayer responses, including some billionaires leaving California, could reduce state income-tax revenue by less than $1 billion per year. That possible ongoing decline is not a certain or already observed loss. It has a different time horizon from the proposed tax’s temporary collections, so the estimates should not be combined into a single net-revenue figure.
For scale, the LAO says state and federal governments spend more than $200 billion per year on California state health-care programs, with most of the state’s share going to Medi-Cal. That figure describes current program spending; it is not an estimate of Proposition 40 revenue.
Where would the money go?
After administrative costs, the proposal directs 90% of remaining revenue to health-care services and 10% to education and food assistance. Its initiative text routes the money through a special reserve fund and excludes it from certain constitutional spending and school-funding rules. Those provisions shape how the revenue would be handled; they do not remove the uncertainty about how much would be collected.
How do proponents connect the proposal to inequality?
The initiative’s purpose section argues that the tax would protect access to health care, support kindergarten-through-grade-14 public education and food-assistance programs, and respond to needs worsened by funding reductions and fiscal uncertainty. It also argues that billionaires can control when, where and how much income they report, allowing wealth to escape state income taxation. These are the measure’s stated rationale and claims, not independent proof of the tax’s effects. The official analysis cited here does not establish a comparable statistic measuring California wealth inequality.
Political support for taxing the wealthy has also drawn attention amid broader concerns about inequality. The Associated Press quoted UCLA political science professor Martin Gilens saying, “There’s kind of a perfect storm that sort of bolsters preexisting inclinations to be sympathetic to the idea of raising taxes on the well-to-do.” That observation describes the political climate, not a fiscal forecast for Proposition 40.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Could people leaving California reduce other tax revenue?
The LAO says behavioral responses could include some billionaires leaving the state, and estimates a possible reduction of less than $1 billion per year in state income-tax revenue. It does not say that departures or this loss have already occurred because of Proposition 40. If income-tax receipts fell, the LAO says there could be less General Fund money available for public services. The estimate remains uncertain and is separate from the temporary wealth-tax collections.
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Could Propositions 41 or 42 affect Proposition 40?
The LAO flags a possible legal conflict: if Proposition 41 or Proposition 42 receives more affirmative votes than Proposition 40, a court could find the measures conflict and stop Proposition 40 from taking effect—even if Proposition 40 wins a majority. That is a legal possibility, not a settled outcome.
- Proposition 42 would prohibit certain new state taxes on personal property and taxes applied retroactively based on earlier conduct or status.
- Proposition 41 includes new audit rules and restrictions related to taxes excluded from the existing voter-approved spending limit.
The LAO’s warning means the result for Proposition 40 could depend not only on its own vote total, but also on the relative vote totals and any later court decision.
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