California Proposition 40 Proposes One-Time 5% Billionaire Tax

California is considering Proposition 40, a measure that would impose a one-time 5% tax on individuals with a net worth of $1 billion or more. The revenue generated from this tax is intended to fund public services, specifically healthcare, education, and food assistance. To implement this, the measure is designed to supersede Article XIII of the California Constitution, which currently limits taxes on most personal property to 1% and stocks and bonds to 0.4%.

The Government of California has structured the initiative to include Section 50310, which grants the California State Legislature the authority to amend the 2026 Billionaire Tax Act. Such amendments would require a two-thirds vote and must further the purposes of the act.

Critics of the proposal argue that this legislative flexibility could allow the Democratic-led Legislature to expand the tax's reach. They contend that the provision could be used to lower the net worth threshold, effectively transforming a targeted wealth tax on billionaires into a broader tax affecting a larger portion of the California population.