Billionaires abound in California. Why not tax their wealth?

California, a state known for its left-leaning politics and wealth, may be an ideal location for a tax on billionaires. The state is home to as many as 250 billionaires collectively worth over $2 trillion. However, a proposed ballot initiative, Proposition 40, which seeks to impose a one-time 5% tax on California's billionaires, faces an uncertain fate in the November 3 election.

Political analysts suggest the initiative is unlikely to pass due to concerns about income inequality and the impact on the state's business prospects.

The debate over taxing the ultrawealthy extends beyond California's borders. New York City Mayor Zohran Mamdani, a Democrat and democratic socialist, used billionaire investor Ken Griffin's penthouse in a campaign to tax high-end second homes in the city. A majority of Republicans also see billionaires as contributing to economic woes, with a 2025 poll showing 64% of independent voters supporting increasing taxes on corporations and billionaires.

Professor Emmanuel Saez, an economics researcher at the University of California, Berkeley, helped draft Proposition 40 and describes it as a straightforward tax on billionaires to fund healthcare. California has more billionaires than any other state, and is home to some of the country's most valuable companies, including tech giants Google, Apple, Meta, and Nvidia.

A recent UC Berkeley IGS poll found that 48% of likely voters supported Proposition 40, while 41% were opposed. A September Public Policy Institute of California poll showed the measure leading 52% to 46%. Proponents claim that Proposition 40 would generate $100 billion for healthcare, food assistance, and education. However, skeptics estimate the revenue at closer to $40 billion and argue that it could drive some billionaires out of state, reducing future tax revenue and investment.

Opposition to the tax has been fueled by billionaires like Sergey Brin, the Google co-founder, who has spent over $100 million to defeat Proposition 40 and support countermeasures. Brin, who fled socialism with his family in 1979, expressed concern about California potentially becoming a socialist state. California Governor Gavin Newsom, a Democrat seen as a potential presidential candidate in 2028, opposes Proposition 40 and advocates for a nationwide federal wealth tax instead.

California's ballot measures often draw significant attention due to the state's powerful direct democracy system, large population, and economy. California voters have only approved one in three citizen initiatives historically. While 60% of Californians now reliably vote Democratic, this does not necessarily mean they support progressive taxation.

European countries, including France, Sweden, Finland, Denmark, and Germany, have repealed wealth taxes between 1997 and 2018 due to concerns about capital flight, avoidance, and economic competitiveness. The California proposition, retroactive to January 1, limits billionaires' ability to escape the tax by moving. Professor Saez believes the tax is unlikely to cause Silicon Valley to come to a standstill due to the quality of California's universities, research, infrastructure, and talent.