California voters decide on historic billionaire wealth tax

California voters face a historic decision on 3 November, determining whether to impose what experts describe as the world’s first direct tax on billionaires. Proposition 40 proposes a one-time 5% levy on the net worth of all individuals in the state with assets exceeding $1bn. The measure aims to raise $100bn (£75bn) to offset significant federal funding cuts to the state’s healthcare system.

Francesco Trebbi, a public policy professor at the University of California, Berkeley, describes the initiative as a “wealth tax that is targeting a very extreme percentile of the wealth distribution. He notes the measure’s historic nature, suggesting it could help even out California’s substantial wealth gap. The state currently holds the largest economy in the United States and the fourth largest globally, surpassing both India and the UK.

Despite its economic might, California also has the largest share of homeless people in the nation. Supporters argue the tax ensures the ultra-wealthy contribute their fair share while backfilling critical budget gaps. Suzanne Jimenez, chief of staff for Service Employees International Union-United Healthcare Workers West, calls the measure a “short-term solution” to impending federal cuts.

She warns that without action, the state faces a potential “collapse of our healthcare system.

The ballot measure has sparked fierce debate, dividing political leaders and even the state’s own billionaire residents. California Governor Gavin Newsom, whose tenure is nearing its end, has voiced strong concerns about the proposal. He fears the tax could drive wealthy residents out of the state, thereby reducing crucial income tax revenue.

A September poll by the Berkeley Institute of Governmental Studies and the Los Angeles Times found the proposition has not secured a clear majority.

The survey indicated that 45% of likely voters support the tax, while 42% oppose it and 13% remain undecided. Approval requires a simple majority of residents. Google co-founder Sergey Brin has reportedly donated over $100m to a political organisation funding efforts to block the wealth tax.

This financial backing underscores the high stakes involved in the upcoming vote.

At least six of the state’s more than 200 billionaires have reportedly left California ahead of the 1 January 2026 residency deadline. Among them are Google co-founders Larry Page and Sergey Brin, venture capitalist Peter Thiel, and former Uber CEO Travis Kalanick. Don Hankey, founder of the Hankey Group, moved to Nevada, stating the measure made him feel “a little bit like I wasn’t wanted.

Meta chief executive Mark Zuckerberg told the company’s board he was considering moving his primary residence out of the state. To retain him, Meta agreed to a new stock deal granting Zuckerberg additional shares to offset potential tax liabilities. Estimates suggest he could owe as much as $12.5bn if the measure passes.

DoorDash cofounder Andy Fang, with a net worth of $1.6bn, labelled the proposal “stupid” on social media, stating it makes it “irresponsible” for him not to plan leaving.

Not all billionaires oppose the levy. Nvidia CEO Jensen Huang has expressed support, telling a US broadcaster: “I don’t mind paying taxes. The more you make, the more taxes you pay.

I’m okay with that. He described himself as the “ultimate American Dream. Businessman Tom Steyer, who unsuccessfully ran for governor earlier this year, also supports the tax, despite calling its drafting “problematic.

Senator Bernie Sanders of Vermont has campaigned vigorously for Proposition 40. At a Los Angeles rally, he criticised billionaires for believing they have a “God-given right to rule. He predicted that voters would deliver a “very powerful lesson” on 3 November.

The debate fits into a broader global trend where wealth taxes have largely fallen out of favour in Europe, now existing only in Spain, Norway, and Switzerland.

Dr Kristian Niemietz, head of political economy at the Institute of Economic Affairs, argues that wealth taxes are “more trouble than they are worth. He cites administrative issues, suppressed investment, and capital flight as key drawbacks. In Norway, an increase in the wealth tax led to more super-wealthy departures in 2022 than in the preceding 13 years combined.

Income inequality in the US is at some of its highest levels in over three decades. The top 1% of households own nearly 32% of all US wealth, according to third-quarter 2025 data. A statewide survey by the Public Policy Institute of California found that 72% of residents believe the gap between rich and poor is widening.

Trebbi suggests this “anti-elite, anti-system sentiment” is driving the policy, aiming to “re-balance the scale a little bit.