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California Voters Reject Proposition 40 Billionaire Wealth Tax Measure
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Prop 40 rejected by California voters, AP projects defeat. Opponents spent hundreds of millions to defeat Prop 40.
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Prop 40 rejected
California voters rejected Proposition 40, a one-time 5% tax on Californians with net worth over $1 billion, according to an Associated Press projection reported by ABC News. The measure would have applied to Californians with wealth over $1 billion and was introduced in response to steep cuts to California's healthcare funding that resulted from the passage of President Donald Trump's "Big Beautiful Bill," ABC News said. With about 60 percent of votes counted, the “no” vote led at 55.6 percent compared with 44.4 percent for “yes,” as the proposal appeared headed for defeat.
Proposition 40 targeted Californians with a wealth of more than $1.1bn (£800m) with a 5% tax on their total wealth, and it failed amid divisions among Democrats and labour unions. Yes on 40 had said the tax would generate around $100 billion over five years, while the Associated Press projection indicated the state would not levy the tax.
Campaign money and leaders
Building a Better California, the main group opposing the tax, raised $333.1 million ahead of the midterms, and ABC News said Sergey Brin was the organization's top donor after giving $102 million.
Gov. Gavin Newsom argued the tax could be dodged by billionaires who could leave the state for another, while Sen. Bernie Sanders and Rep. Ro Khanna backed the measure.
Newsom expressed concerns that the measure could cause the wealthy to leave the state and drive out their crucial income tax revenue, and it said Brin gave more than $100m to a political organisation funding ballot measures that could block the tax.
Californian billionaires, including Google cofounder Sergey Brin, spent more than a quarter of a billion dollars campaigning against the measure.
Dave Regan, head of the union that led the charge for the measure, said on election night that the billionaires' efforts to block the tax created "a lot of confusion and a lot of second-guessing among people".
What comes next
The Associated Press race call rejected the proposal to charge billionaires a one-time 5% tax on most of their wealth, with proponents arguing it could raise $100 billion for healthcare. Incoming US Senate Finance Committee Chairman Ron Wyden signalled that taxing the ultrawealthy remains a central goal for the Democratic Party, adding, "The committee will redouble its efforts to ensure billionaires pay their fair share and hold tax cheats accountable,". NBC News projected that the rejection dealt a blow to progressives who championed the proposal, and it said opponents argued the tax would prompt wealthy Californians to flee the state and harm the state's economy.
Dave Regan pledged to seek a billionaire tax once more in 2028, after the measure failed amid divisions among Democrats and labour unions. Both Bernie Sanders and Ro Khanna were huge proponents and that both have openly discussed weighing a presidential bid in 2028, with Khanna telling ABC News that he and Newsom are "polar opposites" on the issue.