The key facts

  • Prop 40 proposed a one-time 5% tax on the wealth of about 200 California billionaires
  • With ~60% of votes counted, 'no' leads 55.6% to 44.4%; the San Francisco Chronicle assesses the outcome as decided
  • Opponents included Sergey Brin, Gavin Newsom, and the United Domestic Workers union

Measure heading to defeat, according to partial results

A proposal for a one-time tax on billionaires' wealth in California, known as Proposition 40, is heading to defeat based on partial results of Tuesday's midterm voting. This was reported by AFP, citing vote-count data. The measure would have required about 200 billionaires in the state to pay 5% of their combined net worth, with the funds intended primarily to finance healthcare.

The numbers and the assessment of the outcome

With roughly 60% of votes counted, the 'no' option leads with 55.6% against 44.4% for supporters. An analysis by the San Francisco Chronicle, estimating how the remaining ballots will break, showed the result is unlikely to change. California traditionally counts votes slowly, but a number of measures and elected offices, including the governorship, have already been decided.

Who opposed it and why

Wealth-tax supporters viewed the initiative as a key element of global efforts to fight income inequality: by backers' estimates, the one-time levy would have raised about $100 billion, which would have gone to the public healthcare system, hurt by budget cuts under the Trump administration. The opposition camp, which included Google co-founder Sergey Brin, raised hundreds of millions of dollars; their argument was that the tax would drive the wealthy out of California. Outgoing Governor Gavin Newsom, who is expected to run for president in 2028, also spoke out against it, as did the United Domestic Workers union, representing 250,000 care workers, which deemed a one-time tax an unsuitable way to close multibillion-dollar budget gaps. The 'no' campaign ran ads about the loss of future tax revenue if billionaires left, and, according to AFP, the initiative, popular at the start, quickly lost support once the campaign began warning voters about possible 'raids' on their own modest savings.

Context: the first attempt in the US and past failures

Nobel Prize-winning economist Joseph Stiglitz, in a statement passed to AFP by the International Commission on Taxation of Capital, emphasized: 'Prop 40 put a tax on billionaires' wealth on the ballot in the US for the first time.' He also noted that 'serious change rarely moves in a straight line.' This, however, was already the fourth failure for a wealth tax in California in a decade: voters had previously rejected it three times. The elections overall brought a major victory for the Democratic Party across the country and a defeat for Trump's Republicans.