Wealth tax vote: California's Prop 40 billionaire levy faces voters on November 3

Voters in California will decide on November 3, 2026 whether to impose a one-time wealth tax on the state's billionaires, and with a week to go the campaign against it is spending heavily. Proposition 40 would charge a one-time 5% tax on the net worth of California residents worth more than about $1 billion, with 90% of the money going to healthcare. Groups opposing the measure are spending an estimated $1 million a day, according to reports on October 22 and October 26, and recent polls suggest support has slipped.

A wealth tax is a tax on what a person owns, such as shares, businesses and property, rather than on what they earn in a year. Critics of such taxes say wealth is hard to value and that the very rich can move away. California's measure tries to deal with that by charging the tax only once and fixing liability on residency at the start of 2026, so that moving away after that date would not avoid it.

The fight over the numbers is at the centre of the campaign. Supporters, including University of California, Berkeley economist Emmanuel Saez, argue that the state's billionaires pay only about $3 billion a year in state income tax and that a one-time charge on their wealth would raise far more. Opponents argue that some billionaires would leave, taking their future income-tax payments with them, so the long-term cost could cancel out much of the gain. The Legislative Analyst's Office sits between the two, putting a possible ongoing income-tax loss at under $1 billion a year.

There is also a timing problem. The measure is meant to fill a hole left by federal healthcare cuts that are permanent, while the tax would be collected only once. Some healthcare groups have opposed it for that reason, even though most of the money would go to their sector.

For Indian investors and companies, the vote matters because many of the technology founders and investors who would pay it run companies with global reach. A one-time levy on their holdings would not change Indian taxes, but it is being watched worldwide as a test of whether voters will back taxing the very rich directly.

Short-term: The final week will bring more advertising from both sides. A related measure, Proposition 42, would block new or retroactive taxes on personal assets and savings after January 1, 2026, and its fate could interact with Proposition 40's.

Long-term: If Proposition 40 passes, it would likely face court challenges and could encourage similar proposals in other US states. If it fails, opponents will point to it as evidence that voters reject wealth taxes.

Who is affected: California's billionaires, the state budget and people who rely on Medi-Cal, and governments elsewhere weighing wealth taxes.

Questions and Answers