Californians to decide fate of $110 billion wealth tax on 260 billionaires

A ballot initiative that would impose a one-time 5% tax on the wealth of billionaires residing in California goes to voters in November.

The measure, known as Proposition 40, targets the net worth of individuals who lived in the state on January 1 of this year. As of early October, 260 billionaires were based in California, holding a combined wealth of nearly $2.5 trillion. A 5% levy on that total would generate approximately $110 billion. Much of that revenue is earmarked to replace Medicaid funding that was cut by the One Big Beautiful Bill Act passed last year.

The proposal emerged from a broader struggle to tax the ultra-wealthy, a group that has historically minimized their income reporting. Recent research indicated that the 384 richest oligarchs in the country paid only 24% of their economic income in taxes in 2025, a lower rate than the 30% paid by the average taxpayer. Reporting by ProPublica noted that high-profile figures including Elon Musk, Jeff Bezos, Warren Buffett, and Michael Bloomberg have lived largely tax-free. One percent of Americans currently hold over 31% of the nation's total wealth, a sum exceeding $55 trillion.

Six Nobel Prize-winning economists endorsed the measure in an open letter, calling it the first-ever tax on billionaire wealth enacted anywhere in the world. They predicted the vote could serve as a turning point in the balance of power between democracy and oligarchy. However, the proposal faces opposition from key political figures in the state. Governor Gavin Newsom and his Democratic challenger, Xavier Becerra, both oppose the tax. They argue that the measure will prompt a flight of wealthy residents to lower-tax jurisdictions, thereby reducing the state's future income tax base.

The opposition has mobilized significant resources. Google co-founder Sergey Brin has helped coordinate approximately $200 million in spending to defeat Proposition 40 and promote two counter-propositions, 41 and 42. If passed, those measures would bar retroactive taxes and prohibit new levies on financial assets or personal property. Brin has stated that the initiative reminds him of the Soviet Union, a country he fled with his parents in 1979.

Movement of capital and people has already begun. Between January and October, the number of billionaires living in California increased by 20. Yet, several high-profile departures occurred before the tax deadline. Brin and Google co-founder Larry Page moved many business interests out of the state and purchased homes elsewhere in the run-up to Christmas 2025. Travis Kalanick, former Uber CEO, relocated to Texas, while Peter Thiel moved to Miami last year. Economists from Stanford University estimated that the tax would raise only about $30 billion after accounting for these avoidance tactics. They projected that the loss of future income tax revenue would cost the state nearly $39 billion in net present value.

Historical data offers mixed signals on whether such taxes drive migration. A study by a Cornell sociologist and a Treasury Department economist found almost no impact on affluent migration rates in the first year after the 2017 federal tax law capped state and local tax deductions. Nevertheless, a report by Oxfam noted that New York State remains home to 154 billionaires despite having a top city income tax rate of 3.9% and a state rate of 10.9%, compared to zero in Miami. Nine of the ten richest individuals in New York reside in the city.

The tax faces legal hurdles as well. Critics argue that retroactive taxation may violate due process. Some assets, particularly real estate, are excluded from the levy, and foreign billionaires may use double taxation treaties to avoid the tax. Voters will decide the fate of the measure in November. The outcome will determine whether California proceeds with what six Nobel laureates described as a kickstart for a movement to tax ultra-high-net-worth individuals in other states and countries.