How California ultra-rich prepare to fight against proposed ‘world’s first billionaire tax’

California's ultra-wealthy are reportedly formulating a legal strategy to challenge the world's first proposed billionaire tax, Proposition 40, should voters endorse it in early November. If approved, the tax would impose a one-time 5% levy on the net worth of individuals with assets exceeding $1 billion who have resided in California since January 1, 2026, with proceeds primarily funding healthcare programs and some education initiatives.

Proposition 40, backed by tech billionaires, has amassed over $340 million to defeat the measure. The supporters include US Senator Bernie Sanders, SEIU United Healthcare Workers West, and progressive politicians like Ro Khanna. However, the measure faces opposition from major unions, progressive politicians, and organizations such as Planned Parenthood Affiliates of California.

The California Business Roundtable, representing powerful tech, energy, and corporate interests, is leading the legal challenge, backed by the Biden Administration's top lawyer at the US Supreme Court.

The billionaire tax has divided Democrats in the state, with some enthusiastically supporting it while others reject it due to its one-time nature and limited funding focus. Proponents view it as a potential precursor to wealth taxes in other states, given California's high concentration of billionaires. However, opponents argue it is an "everyone tax" affecting doctors, teachers, small businesses, and public safety.

The campaign opposing Proposition 40 has received significant funding from Silicon Valley donors, including Peter Thiel, Eric Schmidt, Tony Xu, Patrick Collison, and Chris Larsen. The No on Prop 40 campaign's messaging focuses on the tax's detrimental impact on healthcare, teachers, and public safety, without addressing its effect on billionaires.