Voters in Silicon Valley rejected the billionaire wealth tax while those in Los Angeles and San Francisco—home to the two top AI companies—wanted it

California is counting the votes for the 2026 election, but the controversial billionaire wealth tax appears destined for defeat. The "no" side of Proposition 40 garnered 55% of the vote statewide, compared to 45% voting "yes." This division mirrors the results in Santa Clara County, known for its tech giants such as Sunnyvale, Palo Alto, Cupertino, and Mountain View.

Marin County, a wealthy enclave north of San Francisco, and San Mateo County, south of the city, also opposed Proposition 40. Meanwhile, 55% of San Francisco County voters supported it, despite being home to prominent AI firms OpenAI and Anthropic that are set to go public and create new millionaires and billionaires.

Proponents of the ballot measure argued it would be a one-time 5% tax on the wealth of billionaires. However, opponents warned that the levy could become permanent and that taxing privately held assets would frighten founders who might need to sell shares in their companies to meet the tax. Silicon Valley, a hotspot of startups and venture capital firms, feared becoming the next group of billionaires to flee the state.

Notably, some billionaires, including Google cofounder Sergey Brin, have already left California after financing the campaign against Prop 40. The state's heavy reliance on wealthy individuals for its budget makes a small loss of just six billionaires a significant blow.

The election results also revealed a split between Northern and Southern California. Los Angeles County voters favored the tax with 53% voting "yes" compared to 47% voting "no." Southern California, an entertainment hub, is worried about AI-generated content, which might have influenced voters' decisions. Opponents of Proposition 40 pushed competing ballot measures, such as Prop 42, which would prohibit taxes on personal savings, assets, and retirement holdings.

This measure gained traction as voters feared the billionaire tax could be expanded to cover everyone's wealth.

Despite Proposition 40's defeat and Prop 42's ban on future wealth taxes, the debate is far from over. Michael Feispor, a partner at EY's private tax team, stated that the "no" vote does not mean similar measures will not be implemented in the future. Wealthy Californians are already re-evaluating their residency, domicile, and estate planning structures due to the heightened importance of long-term planning in light of the tax debate.