San Francisco and California Ballot Backstory · Why is this on my ballot?
Prop 40: summary
Imposes One-Time Tax on Certain Taxpayers
Mark your own choices here. You may bring this sheet into the voting booth.
A YES vote means
California billionaires (residents on January 1, 2026) would pay a one-time 5% state tax on net worth, measured December 31, 2026, mostly for health care.
A NO vote means
No one-time tax on net worth. People worth over $1 billion keep paying state income tax as now.
Both ovals are empty on purpose. The choice is yours.
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.
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.
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.
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.
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.
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.
Needs a simple majority (50% + 1) to pass Some measures need 55% or two-thirds of votes to pass. This one needs only a simple majority.Who bears the cost
California residents worth $1 billion or more, and certain trusts
| 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 | 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) | Not calculated | +$26,250,000 one time | Not calculated |
Other Californians: no new taxNo new cost
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.
Example figures are calculated by code from the cited rates, not written by AI. How we calculate
The strongest case for and against
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.
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.