California Voters Consider Billionaire Wealth Tax Proposition 40

California voters are considering Proposition 40, a ballot measure that would impose a one-time 5% tax on residents with a net worth exceeding $1 billion. The SEIU United Healthcare Workers West, which proposed the measure, claims the tax will generate $100 billion in revenue from approximately 200 billionaires.

A study from the Hoover Institution disputes these projections, estimating that the measure will instead result in a net revenue loss of $38.9 billion. Researchers Joshua Rauh and Benjamin Jaros argue that the one-time gains will be outweighed by the loss of annual income tax payments from wealthy residents fleeing the state.

The analysis notes that seven billionaires holding $539.9 billion in wealth moved out of California between the filing of the initiative and the January 1, 2026, residency deadline, erasing nearly 30% of the potential tax base. Additionally, the Hoover Institution identified eight legal vulnerabilities in the proposal, specifically regarding the assessment of worldwide assets and the valuation methods used for non-public assets.