NBC News reported on July 11 that California’s Proposition 40, the one-time billionaire wealth tax headed for the November ballot, is fracturing traditional political alliances months before voters weigh in. The measure has split typically Democratic-aligned groups against each other and drawn an escalating counter-campaign from the billionaires it targets.
Progressive Allies Have Split Over a Measure Built to Tax 200 People
Proposition 40 would impose a one-time 5% tax on the roughly 200 California residents worth more than $1 billion, applied retroactively to anyone who was a state resident as of January 1, 2026. The measure qualified for the ballot on June 17 after a labor union collected far more signatures than required.
What makes this fight unusual is who ended up on which side. Governor Gavin Newsom spent the weeks before the ballot certification deadline pushing the union behind the measure to abandon it entirely. The union countered instead: it offered to scale the levy down to 2% if Newsom would carry that smaller version through the legislature and sign it into law. Newsom rejected the offer within a day, and Proposition 40 moved forward at its original 5% rate. He then recruited Planned Parenthood, the state’s teachers union, and other traditionally progressive organizations to oppose a tax aimed squarely at the wealthiest residents of a state they usually align with on redistribution questions.
One Billionaire Has Already Spent $82 Million to Stop It
Opposition money has moved fast. One billionaire alone has already put $82 million into defeating the measure, and that spending is expected to grow substantially before November. The opposition campaign draws on the same pool of wealth the tax is designed to reach, which gives it a financial scale most ballot fights never see this early.
The measure also faces a structural threat that has nothing to do with public opinion. Two competing measures, also headed for the same ballot, were designed specifically to blunt or invalidate Proposition 40 if it passes. Both carry the same trigger mechanism: if more than one of the three wins a majority, only the measure with the most votes survives, and the rest are wiped out regardless of how many people voted for them. A Proposition 40 win at the ballot box would not necessarily settle anything.
Unresolved Uncertainty Rarely Slows a Decision Already in Motion
None of this resolves quickly. Even a clean Proposition 40 victory would trigger years of likely litigation over its retroactive design, and the competing measures mean the tax could still be erased by a rival ballot question that draws more votes on the same day it passes. For a resident weighing whether to stay in California or relocate before January 1 matters again, the honest answer is an open-ended fight layered on top of a state that already carries the highest top marginal income tax rate in the country, at 13.3%.
The layered uncertainty outweighs the headline tax rate itself. A wealthy Californian calculating their exposure is pricing in a multi-year period where the rules could change again, get challenged in court, or get quietly repealed by a competing measure most voters never noticed was designed to do exactly that. Uncertainty of that kind tends to push a decision forward rather than delay it, because a state that cannot commit to a stable answer becomes less attractive relative to one that already has. That dynamic sits underneath the calculus driving wealthy Californians toward other markets, where a settled zero-rate answer competes against an open-ended one.
The vote itself isn’t for another four months. For the people this measure targets, the more consequential clock started running the moment Proposition 40 qualified for the ballot, and it has been running ever since.
