California’s Proposition 40 would impose a one-time 5% tax on the net worth of billionaires who lived in the state on January 1, 2026. Sen. Bernie Sanders supports it; labor leaders opposing it warn that its language could threaten ordinary Californians’ savings and home equity. The state’s nonpartisan Legislative Analyst’s Office says real estate, pensions and retirement accounts generally would be excluded, and estimates tens of billions of dollars in temporary revenue. The competing claims make the measure’s design and uncertain fiscal effects central to the debate.
What Proposition 40 would do
The California Legislative Analyst’s Office (LAO) describes Proposition 40 as a one-time state tax equal to 5% of net worth for billionaires who were California residents on January 1, 2026. Payment would be due in 2027, with an option to pay over five years at additional cost. The LAO says real estate, pensions and retirement accounts generally would be excluded. The LAO’s ballot analysis summarizes the measure’s terms.
Ninety percent of proceeds would have to fund health-care services for the public. The balance would go to education, food assistance and tax administration. The California Secretary of State’s Proposition 40 guide says a yes vote would collect the one-time tax; a no vote would not.
Why Sanders supports it—and why labor leaders oppose it
Sanders’s case
Sanders campaigned for Proposition 40 in Southern California in October 2026, arguing that the measure could challenge billionaire influence and support public services. At the rally, he said, “What you are showing people from coast to coast and all over is that, yes, we can take on the greed of the oligarchs.” The Secretary of State’s guide lists Sanders and SEIU United Healthcare Workers West among the measure’s supporters.
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Labor’s warning about savings and home equity
At a separate event at a union training facility in La Palma, labor leaders urged voters to reject the measure. Xochitl Medrano, political director for the Ironworkers’ district council, said, “In the trades, we know you always read the blueprints and you always read the fine print.” She called workers’ pensions and home equity “sweat equity” and warned that the measure could become “a trap door for working families.” The California Primary Care Association, California School Boards Association and California Taxpayers Association are also listed as opponents in the state guide.
The labor leaders’ concern about a possible loophole conflicts with the LAO’s summary that real estate, pensions and retirement accounts generally would be excluded. The available official summary does not establish that those assets would in fact be taxed. The warning is an opponents’ interpretation, not a confirmed description of the measure’s effect.
How much money could the tax raise—and what could it cost?
The LAO estimates a temporary revenue increase of tens of billions of dollars spread over several years. It cautions that the timing and amount are difficult to predict because taxpayer responses and stock values can change. The analyst’s office puts it plainly: “Exactly when and how much the state would collect is very hard to predict for many reasons.”
The same analysis says behavioral responses—including some billionaires leaving California—could reduce state income-tax revenue by less than $1 billion per year. That is a possible ongoing loss, not a guaranteed one. The LAO also estimates that administering the tax could cost tens of millions of dollars per year for several years, paid from the new proceeds.
Those estimates identify possible revenue and administrative effects; they do not conclude that Proposition 40 would devastate California’s economy. Claims about broader harm to jobs, investment or economic growth should be understood as predictions by the people making them, not as conclusions established by the LAO’s fiscal estimate.
What a yes or no vote means
| Choice | Effect |
|---|---|
| Yes | Would impose the one-time tax described in the LAO analysis. |
| No | Would not impose the tax. |
There is also an interaction with two other measures on the November 3, 2026 ballot. If Proposition 41 or Proposition 42 receives more yes votes than Proposition 40, either could prevent Proposition 40 from taking effect even if Proposition 40 wins a majority of yes votes, according to the LAO and the Secretary of State’s guide.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Proposition 40 is not Sanders’s federal wealth-tax proposal
Sanders and Rep. Ro Khanna introduced a separate federal bill, the Make Billionaires Pay Their Fair Share Act, on March 2, 2026. It proposes a recurring annual 5% wealth tax on billionaires nationwide with net worth above $1 billion. That is different from California’s proposed one-time tax, which applies to people who met the residency condition on January 1, 2026.
Economists Emmanuel Saez and Gabriel Zucman estimated that the federal bill could raise $4.4 trillion over a decade, assuming, among other things, a 10% tax-evasion or avoidance rate. That estimate concerns the federal proposal, not Proposition 40’s California revenue. Sanders’s office described the federal bill as applying to 938 U.S. billionaires with approximately $8.2 trillion in combined wealth; those figures likewise do not describe the California measure.
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