California Voters Reject First Proposed U.S. Wealth Tax

California voters rejected Proposition 40, a ballot initiative that would have established the first modern wealth tax in the United States. The measure proposed a one-time 5 percent tax on residents with a net worth exceeding $1 billion, aiming to raise an estimated $100 billion over five years to offset federal Medicaid cuts signed into law by President Trump.

Dave Regan and the Service Employees International Union-United Healthcare Workers West placed the tax on the ballot and spent over $30 million on the campaign. However, the measure failed due to a divided Democratic coalition and a massive spending gap. Opponents, including tech executives and billionaires, outspent proponents by more than 10-to-1. Google co-founder Sergey Brin contributed over $100 million to the opposition, which utilized advertisements framing the tax as a threat to retirement savings.

Key state leaders, including outgoing Governor Gavin Newsom and Governor-elect Xavier Becerra, opposed the measure, arguing it was a reckless experiment that would drive away entrepreneurs and harm economic competitiveness. While U.S. Senator Bernie Sanders endorsed the initiative, the opposition's financial advantage proved decisive. Following the defeat, Regan vowed to pursue another billionaire tax in 2028 if lawmakers fail to address healthcare funding gaps.