California's billionaire tax trails in early returns as a rival ban on wealth taxes leads

On 3 November 2026, California voters decided whether to impose the first state wealth tax in the United States. Early returns on election night showed Proposition 40, the so-called billionaire tax, well short of a majority. According to Associated Press figures reported by CalMatters, 57% of votes were against it with 35% counted. Mission Local reported that with half the votes counted, the measure was down nearly 15 points statewide. KQED said it was still too early to call the result.

What Proposition 40 would do

The measure would levy a one-off 5% tax on the net worth of anyone with more than $1 billion in assets who lived in California on 1 January 2026, about 200 people, according to CalMatters and KQED. Stocks, bonds, business holdings and other valuable personal property would count. Net worth would be measured at 31 December 2026, and payment would be due in one sum or in instalments over five years.

The sponsor, the healthcare union SEIU-United Healthcare Workers West, puts the yield at about $100 billion over five years, mainly for healthcare. The state’s nonpartisan Legislative Analyst’s Office estimates “tens of billions of dollars” over several years, CalMatters reports, and expects departures by billionaires to reduce income tax receipts by less than $1 billion a year.

Two rival measures

Opponents also put two measures of their own on the ballot. Under California’s rules, when measures conflict, the one with the most votes prevails. Proposition 41 would bar taxes that sit outside the state’s 1979 spending limit, as Proposition 40 is designed to do, and would require audits of future tax proposals. Proposition 42 would prohibit state taxes on financial assets, private businesses, pensions and other forms of wealth, and most retroactive taxes.

On Mission Local’s half-count figures, Proposition 42 was ahead by almost 9 points and Proposition 41 was behind by about 5. If Proposition 42 passes with more votes than Proposition 40, it would rule out the billionaire tax and close off similar levies on financial assets in future.

Money and politics

CalMatters puts spending against Proposition 40, including support for the two rival measures, at $316.7 million. Google co-founder Sergey Brin, who moved out of the state, gave $102 million to Building a Better California, the committee he founded to fight the tax. KQED reports the yes campaign raised about $33 million. Governor Gavin Newsom opposed the tax and endorsed Proposition 42. The state Democratic Party and the California Federation of Labor Unions backed it.

What it means for family offices

Whatever the final count, the design of Proposition 40 is the part advisers will remember. It fixed residence on a date already in the past by the time voters saw it, so a family that left California after 1 January 2026 would still have been caught. Families with US members or assets should expect any future wealth tax proposal, in California or elsewhere, to use a similar look-back, and plan residence well before a measure qualifies for the ballot. If Proposition 42 is confirmed, California would instead have a standing bar on taxing financial assets. That would matter more to long-term domicile planning than the defeat of one levy. For a comparison, South Africa ruled out an annual wealth tax earlier this year, citing the same risk of the top tax base relocating.

Sources: CalMatters (3 November 2026); KQED (3 November 2026); Mission Local (3 November 2026).