California
Prop 40Imposes One-Time Tax on Certain Taxpayers
Watch the backstory
Read the transcript
In 2016, California voters extended higher income tax rates on high earners through 2030.
This November, Prop 40 asks for a one-time tax on Californians worth over one billion dollars. Why now?
In July 2025, a federal law called H.R. 1 changed Medi-Cal, the state's health coverage for low-income people.
In 2027, a new work rule begins. The Legislative Analyst estimates one to two million people could lose coverage.
If Prop 40 fails, no wealth tax is collected.
We found no agency plan listing program cuts if it fails.
Deficit projections differ. In November 2025, the LAO projected an almost 18 billion dollar budget problem for 2026-27, and deficits of about 35 billion dollars a year after that.
Revenue estimates then rose. For the budget passed in June 2026, the administration estimates operating deficits, comparing each year's revenue with its costs, of 18.5 billion dollars in 2026-27, falling to 8.3 billion in 2029-30.
The Analyst estimates tens of billions of dollars over several years, but the amount is very hard to predict.
Billionaires may act to lower their income taxes, for example by leaving California. The Analyst says this would probably cut income tax revenue by less than one billion dollars a year.
The Analyst says California has a few hundred billionaires. Payers could spread the tax over five years, but would pay more to do so: a 7.5 percent yearly charge on the unpaid balance.
Illustrative example: a California resident on January 1, 2026, with 2 billion dollars of taxable net worth on December 31, 2026.
Prop 40 would add a one-time tax of 100,000,000 dollars, 5 percent of net worth, due in 2027.
Voters signed a petition, and it qualified for the ballot on June 17, 2026.
Even with a majority YES, it could be stopped: if Prop 41 or 42 gets more yes votes, courts could find a conflict.
A YES vote means billionaires who lived in California on January 1, 2026 pay a one-time tax of five percent of their net worth, mostly for health care.
A NO vote means no one-time tax, and they keep paying state income tax as they do now.
Sources and the full analysis are at ballotbackstory.org.
Ballot Backstory. Why is this on my ballot?
What your vote does
Both ovals are empty on purpose. The choice is yours.
Imposes One-Time Tax on Certain Taxpayers. Initiative Constitutional Amendment and Statute. Imposes 5% tax on certain taxpayers with assets over $1 billion; revenue primarily for health care. Exempts revenues from constitutional requirements for school funding and spending limit. Fiscal Impact: Temporary revenue increase of tens of billions of dollars spread over several years from wealth tax on billionaires. Possible ongoing decrease of less than $1 billion per year in income tax revenue from billionaires. Supporters: US Senator Bernie Sanders; SEIU United Healthcare Workers West Opponents: California Primary Care Association; California School Boards Association; California Taxpayers Association
This is the exact wording from the official voter guide.
If it fails
Timing: from 2027
If Prop 40 fails, no wealth tax is collected. This guide found no agency plan that lists cuts to programs if Prop 40 fails. Separately, the LAO and the state administration project budget deficits in the next few years, of different sizes. 22526
- If it passes, after administrative costs, 90% of the money would go to a health account and 10% to a school and food aid account. Lawmakers could spend up to $22.5 billion a year from the first and $2.5 billion from the second. These are spending limits, not revenue estimates. 4
- Estimates differ. In November 2025, the LAO projected an almost $18 billion budget problem for 2026-27 and structural deficits near $35 billion annually from 2027-28. The administration's June 2026 estimates show operating deficits (each year's revenue against its costs) of $18.5 billion in 2026-27, falling to $8.3 billion in 2029-30. 2526
- The LAO says Prop 40 could be stopped even with a majority yes vote, if Prop 41 or 42 gets more yes votes. It says courts could find that Prop 41 or 42 conflicts with it. Under Prop 42, new taxes on owning financial assets would not be allowed. 230
- Supporters say the tax would raise about $100 billion. The LAO says the state would probably collect tens of billions of dollars, a temporary increase spread across several years. Opponents argue it is a one-time tax that gives only short-term money. 32
- The LAO says the amount and timing are very hard to predict. Much of the wealth is in stocks, whose prices always change. It is also hard to know what billionaires would do to lower their tax. 2
Why it’s on the ballot now
In July 2025, a federal law called H.R. 1 changed Medi-Cal (state health coverage for low-income people) and CalFresh (food aid) in ways that generally aim to cut federal costs. 62
Starting January 2027, H.R. 1 requires most able-bodied, childless adults in Medi-Cal (generally ages 19 to 64) to work, study or volunteer, with some exemptions. The Legislative Analyst estimates around 1 to 2 million people could lose coverage. 6
The Legislative Analyst projects that new federal limits on taxes on health care providers, such as health plans and hospitals, will cost the state a few billion dollars a year in future years. 6
The measure's own findings say Medi-Cal could lose up to $19 billion a year in federal funding, and that the 2025–26 state budget cut some Medi-Cal benefits. 4
How we got here
Prop 63 taxes incomes over $1 million
Voters approved Proposition 63, which taxes income over $1 million a year and requires the money to pay for mental health services. The tax has been collected since 2005. 12
Prop 30 raises top income tax rates
Voters approved Proposition 30. High-income taxpayers paid an extra 1%, 2% or 3% tax on part of their incomes, through 2018. 8
Prop 55 extends those rates
Proposition 55 extended the Proposition 30 income tax rates on high earners from 2019 through 2030, and set a formula that can send some surplus money to Medi-Cal. 8
H.R. 1 becomes law
The President signed H.R. 1, also called the One Big Beautiful Bill Act. It changes Medi-Cal and CalFresh in ways that generally aim to reduce federal costs. 6
LAO projects new state health costs
The Legislative Analyst projected that H.R. 1's limits on taxes on health care providers, such as health plans and hospitals, will cost the state a few billion dollars a year in future years. 6
One-time tax qualifies for ballot
The Secretary of State announced that the one-time tax initiative had become eligible for the November 3, 2026 ballot. 5
Federal coverage ends for some immigrants
Starting October 2026, H.R. 1 ends federal funding for full Medi-Cal coverage for some noncitizens, such as refugees. The state budget pays for their coverage through June 2027. 11
Medi-Cal work rule begins
H.R. 1 starts requiring most able-bodied, childless adults (generally ages 19 to 64) in Medi-Cal to do at least 80 hours a month of work, school or community service, with some exemptions. The Legislative Analyst estimates around 1 to 2 million people could lose coverage. 6
Prop 40: Imposes One-Time Tax on Certain Taxpayers
The money
The Legislative Analyst (LAO) says the state would probably collect tens of billions of dollars over several years; the exact amount and timing are very hard to predict. Some billionaires may leave California, and the income taxes they pay would go away. The LAO says responses like this probably would cut state revenues by less than $1 billion a year. Running the tax could cost tens of millions a year for several years, paid from the tax. 2
- Amount
- Tens of billions of dollars, collected over several years (LAO estimate)
- How long
- One-time tax, due in 2027; payments may be spread over five years
- Who pays
- People who lived in California on January 1, 2026 and are worth over $1 billion, measured on December 31, 2026 (the LAO says California is home to a few hundred people with that net worth). Individuals, but not trusts, worth under $1.1 billion pay a lower rate. The LAO says real estate, pensions and retirement accounts generally would be excluded. The tax is due in 2027; payers may spread it over five yearly payments with a 7.5% yearly charge on the unpaid balance. 24
- Vote needed to pass
- Needs a simple majority (50% + 1) to passSome measures need 55% or two-thirds of votes to pass. This one needs only a simple majority.
It could be stopped even if it gets yes votes from a majority of voters. That can happen if Proposition 41 or 42 gets more yes votes, because courts could find a conflict. 2
Locked-in budget
Medi-Cal has about $220 billion from all sources in 2026-27. The LAO says that in 2026-27 the school funding guarantee likely changes by about 40 cents for each $1 change in General Fund revenue. This measure's money would be exempt from that guarantee and the state spending limit; after administrative costs, 90% must go to health care and 10% to education and food assistance. 111024
Who bears the cost
California residents worth $1 billion or more, and certain trusts
What they already pay
- The LAO says California billionaires, like everyone earning money in the state, pay state tax on their yearly income. The state does not tax simply owning assets such as stocks. 230
- The Franchise Tax Board says state income tax rates run from 1% to 12.3%, plus 1% on taxable income over $1 million, for a top rate of 13.3%. Capital gains are taxed at the same rates. 27
- Voters extended the higher top income tax rates in 2016 with Prop 55. The LAO says Prop 3 on this ballot would make them permanent, and that the top 2% of taxpayers pay these rates and about half of all state income taxes. 29
- The measure's findings, citing "leading economic estimates," say billionaires pay less than 1.5% of their wealth in yearly taxes, counting all levels of government. Opponents say wealthy residents already pay nearly half the state's income taxes. 43
If it passes
- A one-time tax of 5% of net worth, for billionaires who lived in California on January 1, 2026. Net worth is counted on December 31, 2026. The LAO says California has a few hundred billionaires; supporters say about 200 would pay. The tax is due in 2027. 243
- For individuals (not trusts) below $1.1 billion, the rate falls 0.1 percentage point per $2 million under, reaching zero at $1 billion. A married couple files as one individual. Not counted: real estate held directly or via a revocable trust, qualified pensions, IRAs, and Roth accounts up to $10 million. 4282
- Up to $5 million in total of art, collectibles, vehicles and other private assets can be left out. Payers may choose five yearly installments, with a 7.5% yearly charge on the unpaid balance. The tax cannot be deducted from state income tax. 4
| Example | Pays now | Added | % of current |
|---|---|---|---|
| Illustrative: a California resident on Jan. 1, 2026, with taxable net worth of $2 billion on Dec. 31, 2026 28 | Not calculated | +$100,000,000 one time | Not calculated |
| Illustrative: a California resident on Jan. 1, 2026, with taxable net worth of $1.05 billion on Dec. 31, 2026 (lower phase-in rate) 28 | Not calculated | +$26,250,000 one time | Not calculated |
Other Californians: no new taxNo new cost
If it passes
- Net worth of $1 billion or more is taxed. The LAO says some billionaires may leave, ending their income taxes, probably cutting revenue under $1 billion yearly. In December 2025, the LAO and Finance Director called a loss of hundreds of millions of dollars or more a year likely. 4224
- The LAO calls this decrease possibly ongoing, while the wealth-tax money would be temporary. Opponents cite a Stanford study saying the tax would cost California $25 billion as companies and wealthy residents leave; the argument gives no period. 2243
- The Legislature may amend the measure by a two-thirds vote of each house, if the change furthers its purposes. Opponents argue this lets the Legislature expand the tax without a vote of the people. 43
Example figures are calculated by code from the cited rates, not written by AI. How we calculate
Promised and delivered
CA Prop 63 (2004)
Promised
A 1% tax on income over $1 million for mental health. The LAO estimated about $275 million in 2004–05 (a partial year), $800 million in 2006–07, and probably more each year after that. 7
Delivered
In March 2024, the LAO said the tax typically raises $2 billion to $3.5 billion a year, about one-third of the money counties get for mental health services. 12
CA Prop 55 (2016)
Promised
The LAO estimated $4 billion to $9 billion a year (in 2016 dollars) from 2019 through 2030, depending on the economy and the stock market. Half of any revenue above constitutionally required education spending and the cost of programs in place on January 1, 2016, as estimated by the Director of Finance, up to $2 billion, would go to Medi-Cal; the LAO said that could be reduced somewhat in difficult budget years. 8
Delivered
In early 2018, the administration's first calculation under the formula, for 2018-19, found a $1.9 billion deficit, so it gave Medi-Cal no extra money. The LAO noted the calculation would be finalized with the budget, and said another reading of the measure would have sent $800 million to Medi-Cal. 9
Who’s behind it
How it got on the ballot: Citizen petition
Placed on the ballot by voter petition. It needed 874,641 valid signatures. On June 17, 2026, the Secretary of State announced it was eligible for the ballot. The proponent is Suzanne Jimenez. 5
Where the support comes from
Placed by who endorsed it and who funded it, not by our opinion. How we place measures
The California Democratic Party recommends Yes on Prop 40, while the California Republican Party and the Howard Jarvis Taxpayers Association recommend No. The California Labor Federation, a labor organization, and the San Francisco Green Party support it. The California Teachers Association, a labor organization, and the San Francisco Democratic Party oppose it. The largest donors to committees supporting it are SEIU United Healthcare Workers West and Alan Davis; the opposing committees' largest donors include Building A Better California, Chris Larsen and Ripple Labs. 171819201621152223
Endorsements
| Group | YES | NO | Neutral |
|---|---|---|---|
| Progressive slate | |||
| San Francisco League of Pissed Off Voters | Yes | ||
| Harvey Milk LGBTQ Democratic Club | Yes | ||
| Moderate slate | |||
| GrowSF | No | ||
| San Francisco Chamber of Commerce | No | ||
| Political parties | |||
| San Francisco Democratic Party | No | ||
| San Francisco Green Party | Yes | ||
| California Democratic Party | Yes | ||
| California Republican Party | No | ||
| Labor | |||
| California Labor Federation | Yes | ||
| California Teachers Association | No | ||
| Other groups | |||
| SPUR | No position | ||
| San Francisco Women's Political Committee | Yes | ||
| Alice B. Toklas LGBTQ Democratic Club | Yes | ||
| Edwin M. Lee Asian Pacific Democratic Club | No | ||
| Howard Jarvis Taxpayers Association | No | ||
| League of Women Voters of California | Neutral | ||
Follow the money
YESTop donors
One donor gave more than half of this side’s money.
- SEIU United Healthcare Workers West (committees combined)$31.8M
Who is this?
Statewide local union of the Service Employees International Union in California. It had about 97,000 members in 2020. 1
What they’ve said
- Alan Davis$325K
- Saikat Chakrabarti$201K
Who is this?
Former Stripe engineer and former congressional candidate. Chakrabarti co-founded Justice Democrats, a PAC that works to elect progressive members of Congress. 1
What they’ve said
A news report says Chakrabarti signed an open letter supporting Prop 40. Rejecting arguments that the tax would hamper innovation, Chakrabarti said, “I’m not a billionaire, but I have enough experience building wealth in California’s tech sector to know this fear is overblown.” 2
- Ross Boucher$200K
- California Labor Federation AFL-CIO$200K
Who is this?
The federation's website says it represents over 1,300 unions in California. It says they have over 2.3 million union members in fields such as trucking, retail, construction and health care. 1
What they’ve said
The federation endorsed Prop 40, which it calls a one-time 5% tax on billionaires to fund Medi-Cal. Its president, Lorena Gonzalez, said California's billionaires should return funds to hospitals and health care programs. 1
- Hillary Perkins$100K
- Excessive Wealth$40K
- California Donor Table Issues Committee$40K
- William Connell$25K
- John Esler$25K
- The top 5 donors gave 98% of this side’s money.
- 1% came from outside California.
- Independent spending (not controlled by the campaign): $11.6K
Committees: Tax the Ultra-Rich Now, Yes on 3 & 40, No on 41 & 42; Yes on 40 - Billionaire Tax Now - No on 41 & 42, Sponsored by Service Employees International Union - United Healthcare Workers West
NOTop donors
One donor gave more than half of this side’s money.
- Building A Better California$135M
- Chris Larsen$5M
Who is this?
Executive chairman and co-founder of Ripple. Larsen earlier co-founded the online mortgage lender E-Loan. 1234
- Chris Larsen - Wikipedia
- SF-based crypto firm gave $5M to Trump’s controversial ballroom project | The San Francisco Standard
- Surprise, Lurie’s charter reform campaign is raking it in | The San Francisco Standard
- Lurie’s $13.5M campaign to clean up City Hall adds Newsom to its corner | The San Francisco Standard
- Ripple Labs$5M
Who is this?
Technology company that offers enterprise blockchain products. It was founded in 2012 and is based in San Francisco. 1
- California Business Roundtable Issues PAC$813K
Who is this?
Business group set up in 1976. Its website says it brings together executives from California companies, and its Issues PAC takes part in ballot measure campaigns. 12
Their stake
The California Business Roundtable sponsors Californians Against Tax Increases, a committee opposing Prop 40. A news report says Roundtable president Rob Lapsley argues that the measure's clause letting the Legislature change the tax by a two-thirds vote opens the door to far more sweeping tax changes. 34
From public records, not their own explanation.
- California Business Roundtable
- About the California Business Roundtable – California Business Roundtable
- Campaign finance filings as of 2026-10-24 (compiled by this guide from CA Secretary of State: Proposition 40 contribution totals)
- After Newsom Couldn’t Stop It, California Braces for Billionaire Tax Brawl - CPA Practice Advisor
- Right Path California Issues PAC$571.5K
- Daniel Tierney$200K
Who is this?
- California Medical Association$100K
Who is this?
Professional group for physicians in California. It speaks for more than 50,000 physician members. 1
What they’ve said
- California Primary Care Association Advocates$100K
Who is this?
CPCA Advocates says it is the advocacy affiliate of the California Primary Care Association. It says it works for community health centers through state and federal advocacy. 1
What they’ve said
Leaders of the California Primary Care Association, the California Medical Association and the California School Boards Association said the tax threatens funds for schools and clinics. They said it would make state revenue less steady. 2
- Ronald Conway$100K
Who is this?
- Intersect USA, LLC(Michael Wheeler)$100K
- The top 5 donors gave 100% of this side’s money.
- 0% came from outside California.
- Independent spending (not controlled by the campaign): $95.8K
Committees: Californians Against Tax Increases, Sponsored by the California Business Roundtable - No on 40; Golden State Promise - No on Prop 40; No on Prop 40 - Doctors, Teachers, Small Businesses, Working Families and Public Safety Against the Reckless Wealth Tax Experiment; Stop the Squeeze - No on Prop 40
- YES side: $11,250 given by one committee on this side to another was counted once.
- YES side independent expenditures (Form 496) of $11,601, mostly by: Oakland Rising Ballot Committee sponsored by Center for Empowered Politics $3,445; CALIFORNIA DEMOCRATIC SOCIALISTS OF AMERICA POLITICAL ACTION COMMITTEE $2,987; San Diego Labor Coalition, Sponsored by Laborers' International Union of North America Local 89 $2,788. Separate from total_raised.
- Californians Against Tax Increases, Sponsored by the California Business Roundtable - No on 40 (FPPC 1485228) supports or opposes several measures; the Secretary of State attributes $754,822 of its $779,822 to this one. Donor amounts here are scaled by that same share (97%).
- Californians Against Tax Increases, Sponsored by the California Business Roundtable - No on 40: added $184,488 of 24-hour late contributions dated after the Secretary of State's 2026-10-22 cutoff.
- No on Prop 40 - Doctors, Teachers, Small Businesses, Working Families and Public Safety Against the Reckless Wealth Tax Experiment: added $16,500,000 of 24-hour late contributions dated after the Secretary of State's 2026-10-22 cutoff.
- NO side: $21,279 given by one committee on this side to another was counted once.
- NO side independent expenditures (Form 496) of $95,831, mostly by: Ron Burkle $50,000; Reform California with Carl DeMaio - Ballot Measure Committee $38,500; Youth Power PAC $3,816. Separate from total_raised.
- Committee totals are the Secretary of State's per-measure 'Total Reported Contributions' through 2026-10-22 (secretary of state page), plus later 24-hour reports from the Cal-Access bulk export built 2026-10-28. Donors, geography and independent expenditures come from the itemized Cal-Access filings. Contributions to committees that back several measures are credited pro rata to the share the Secretary of State assigns to this measure.
- Source cutoff: the Cal-Access export used was built 2026-10-27 (UTC) and the Secretary of State's per-measure totals run through 2026-10-22. as_of is the latest filing from this measure's own committees, which can be earlier.
- Money given to a committee by another committee is shown as that committee, not the money's original source (e.g. a union's issues PAC, not its members). Donor type is inferred from the name; check the filing for sponsors.
Sources: CA Secretary of State: Proposition 40 contribution totals · Cal-Access raw campaign finance data export · FPPC Top 10 Contributors, November 2026 General Election
Related and competing measures
Conflicts with Prop 41
Prop 41 would cancel state taxes enacted after January 1, 2026 whose money is exempt from the state spending limit, as this measure's money is. If Prop 41 gets more yes votes, courts could find a conflict. 1312
If two conflicting measures both pass, the one with more YES votes takes effect.
The strongest case for and against
Each side’s best argument, written as its supporters would make it. Neither is our view.
Strongest case for
Supporters, including U.S. Senator Bernie Sanders and SEIU United Healthcare Workers West, say the recent federal budget law cut health care funding and will end coverage for over a million Californians. They say about 200 California billionaires would pay a one-time tax that raises about $100 billion. That money, they say, would keep local hospitals and emergency rooms open, keep health care affordable, prevent mass teacher layoffs and keep children fed. They argue billionaires pay much lower tax rates than working families, and that most of their $2 trillion in wealth will never be taxed. They say opponents have offered no viable solution to replace the lost funding. 13
Strongest case against
Opponents, including Governor Gavin Newsom, the California Medical Association, the California School Boards Association and the California Taxpayers Association, say the tax would drive companies and wealthy residents out of state. They cite a study by Stanford University economists finding it would cost California $25 billion in lost revenue. They say the money is temporary, and that exempting the money from voter-approved school funding rules shortchanges schools over $3 billion a year. They argue the Legislature could amend the measure without voter approval and expand the tax, that it taxes retirement accounts for the first time, and that it has no safeguards to stop billions from going to health insurance companies. 3
Sources
Every fact on this page links to one of these sources.
- Ballot label: title (table of contents) and summary (Quick Reference Guide), Proposition 40 (en edition), CA Official Voter Information Guide, Nov 3, 2026, p. 3, 9
- Proposition 40: Analysis by the Legislative Analyst, CA Official Voter Information Guide, Nov 3, 2026, p. 1-2
- Proposition 40: Arguments and rebuttals, CA Official Voter Information Guide, Nov 3, 2026, p. 3-4
- Proposition 40: Text of Proposed Law, CA Official Voter Information Guide, Nov 3, 2026, p. 1-14
- Secretary of State announces new measure eligible for November 2026 ballot (one-time tax)
- LAO: Key Impacts of H.R. 1 on Medi-Cal and CalFresh (Feb 11, 2026)
- LAO analysis of Proposition 63 (Nov 2004)
- LAO analysis of Proposition 55 (Nov 2016)
- LAO: Proposition 55 revenue estimates (Mar 1, 2018)
- LAO: The 2026-27 Budget: Proposition 98 Guarantee and K-12 Spending Plan
- LAO: The 2026-27 California Spending Plan: Health
- LAO analysis of Proposition 1 (March 2024)
- Ballot label: title (table of contents) and summary (Quick Reference Guide), Proposition 41 (en edition), CA Official Voter Information Guide, Nov 3, 2026, p. 3, 9
- Ballot label: title (table of contents) and summary (Quick Reference Guide), Proposition 42 (en edition), CA Official Voter Information Guide, Nov 3, 2026, p. 3, 10
- San Francisco Democratic Party: recommendations for the November 3, 2026 election
- San Francisco Green Party: recommendations for the November 3, 2026 election
- California Democratic Party: recommendations for the November 3, 2026 election
- California Republican Party: recommendations for the November 3, 2026 election
- Howard Jarvis Taxpayers Association: recommendations for the November 3, 2026 election
- California Labor Federation: recommendations for the November 3, 2026 election
- California Teachers Association: recommendations for the November 3, 2026 election
- How endorsers line up on Prop 40: this guide's coalition groupings (endorsement method 1.0, data as of 2026-10-27)
- Campaign finance filings as of 2026-10-26 (compiled by this guide from CA Secretary of State: Proposition 40 contribution totals; data/money/ca-2026-11-p40.json, main@0dcbec8)
- LAO: A.G. File No. 25-0024, Amendment #1 (billionaire tax initiative fiscal analysis)
- LAO: The 2026-27 Budget: California's Fiscal Outlook (Nov 2025)
- LAO: The 2026-27 Budget: Overview of the Spending Plan
- FTB: Summary of Federal Income Tax Changes
- Cost examples for Prop 40: this guide's calculations from the cited rates (ai/impact_costs.py)
- Proposition 3: Analysis by the Legislative Analyst, CA Official Voter Information Guide, Nov 3, 2026, p. 1-2
- Proposition 42: Analysis by the Legislative Analyst, CA Official Voter Information Guide, Nov 3, 2026, p. 1-2