California’s proposed billionaire tax appeared headed for defeat on Wednesday in one of the final verdicts from voters in an election week that saw a wave of anti-billionaire sentiment elsewhere.
The latest results on Wednesday afternoon showed California’s Proposition 40 down by over 11 percentage points, with 60% of votes counted but the race not yet formally called.
The referendum would amend California’s constitution and impose a one-time 5% tax on California residents and trusts with assets over $1 billion on Jan. 1, 2026. The revenue would primarily go toward healthcare, as well as food assistance and education.
Some assets, such as real property and certain retirement accounts and pensions, were excluded.
The measure was estimated to impact about 200 billionaires in the state. It faced fierce opposition from many in Big Tech and lost steam with voters as Election Day neared.
People attend a rally against Proposition 40 on Oct. 5 in La Palma, Calif. (Eric Thayer/Los Angeles Times via Getty Images) · Eric Thayer via Getty Images
Google (GOOG, GOOGL) co-founder Sergey Brin was one of the measure’s most vocal opponents. He contributed a reported $102 million to a political committee to fight the measure.
Other billionaires made detailed plans in case it passed. Meta (META) CEO Mark Zuckerberg told his board, according to a New York Times report, that they needed to take steps to shield him from the tax or he would publicly list his home in Palo Alto for sale.
The measure was also opposed by some Democrats, who argued it wouldn’t work.
Outgoing California Gov. Gavin Newsom emerged as an opponent, arguing that billionaires would both dodge the tax and leave the state. He cited a report from the California Legislative Analyst’s Office that estimated the measure might temporarily boost state revenues but could be an overall drag on regular income taxes and “would reduce state revenues by less than $1 billion per year.”
Across the country, voters in red and blue states delivered verdicts on wealth inequality and the influence of the ultrarich. In Texas, where Elon Musk spent more than $200 million to keep the state’s Senate seat in Republican hands, voters flipped the seat for Democrats and made clear their unease over AI data centers.
Tuesday’s results also saw a series of wins by candidates who represent the Democratic Socialists of America, many of whom ran on explicitly anti-billionaire platforms. At least seven DSA members will take seats in Congress next year, as well as the mayors’ offices of Los Angeles and Washington, D.C.
Sen. Bernie Sanders and Rep. Ro Khanna are seen during a “Ballots Over Billionaires” rally on Oct. 5 in Los Angeles. (Justin Sullivan/Getty Images) · Justin Sullivan via Getty Images
California voters were also weighing competing measures: Proposition 41 and Proposition 42, which were introduced by opponents of Proposition 40 to prevent the wealth tax from taking effect.
Proposition 42 would prohibit taxes on personal savings, assets, and retirement holdings. It was on track to pass based on the latest results.
The wealth tax had support from progressives like Sen. Bernie Sanders of Vermont and Rep. Ro Khanna of California, who called the measure “the most important ballot initiative in America.”
Khanna on Tuesday night acknowledged the measure’s fading prospects, saying in a press conference, “I’m proud of our efforts wherever we end up [and] I am going to be right there, first in line supporting this in the next election cycle if it doesn’t pass this one.”
On Wednesday, Khanna wrote an op-ed for MS Now calling for a new federal tax on billionaires.
Ben Werschkul is a Washington correspondent for Yahoo Finance.