California wealth tax on billionaires fails despite blue wave, in blow to progressives

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Politics Desk

In Short: California voters rejected Proposition 42, a proposed one-time 5% tax on billionaires' net worth, despite support from public safety unions and progressive politicians.

Voter's Edge California at your fingertips! (27905948751) — Photo: League of Women Voters of California LWVC from USA / Wikimedia Commons (CC BY 2.0)

Photo: League of Women Voters of California LWVC from USA / Wikimedia Commons (CC BY 2.0)

California voters rejected Proposition 42, a proposed one-time 5% tax on the net worth of billionaires who met California's residency requirements as of January 1, 2026, according to the Associated Press. The measure aimed to generate about $100 billion in revenue for the state, primarily to fund healthcare.

Proposition 42 was promoted by 42 organizations, including public safety unions like the California Professional Firefighters and Peace Officers Research Association of California, who argued it would protect pensions and retirement accounts from future taxes. However, the initiative was primarily bankrolled by billionaires themselves, who spent over $379 million to defeat the measure, outspending supporters by more than 250-1.

Opponents of the tax argued that it could lead to unintended consequences, such as encouraging billionaires to move out of state, taking their businesses and jobs with them. Newsom, a potential presidential candidate, while not endorsing the specific proposal, has supported a national minimum tax on individuals with a net worth above $100 million.

The University of California, Berkeley's Henderson argued that the tax was ethically and legally problematic, either due to the fundamental nature of a wealth tax or because of its retroactive form. He claimed that the $300 million campaign against Proposition 42 and efforts to put it on the ballot were able to 'deceive voters' by suggesting the tax would expand beyond billionaires.

Supporters of the tax proposal, including progressive politicians like Sanders and Elizabeth Warren, have long advocated for a federal wealth tax. However, Newsom has expressed concerns that a California wealth tax could disadvantage the state.

In a recent filing, Mark Zuckerberg, whose net worth totals more than $200 billion, considered leaving the state to avoid the proposed tax on billionaires. The filing highlights how one of the world’s wealthiest individuals is bracing for the possibility that California voters pass Proposition 42, which would primarily fund healthcare.

The measure faced significant opposition, with commercials warning about potential losses in future tax revenues if billionaires were to leave the state. One billionaire businessman said the proposition made him feel 'a little bit like I wasn't wanted'.

Despite the rejection, supporters of the billionaire tax proposal have not ruled out bringing the measure back before voters in 2028 if state lawmakers fail to find an alternative.

What's confirmed

California voters rejected Proposition 42, a proposed one-time 5% tax on the net worth of billionaires who met California's residency requirements as of January 1, 2026, according to the Associated Press. The measure aimed to generate about $100 billion in revenue for the state, primarily to fund healthcare.
Proposition 42 was promoted by 42 organizations, including public safety unions like the California Professional Firefighters and Peace Officers Research Association of California, who argued it would protect pensions and retirement accounts from future taxes. However, the initiative was primarily bankrolled by billionaires themselves, who spent over $379 million to defeat the measure, outspending supporters by more than 250-1.
Opponents of the tax argued that it could lead to unintended consequences, such as encouraging billionaires to move out of state, taking their businesses and jobs with them. Newsom, a potential presidential candidate, while not endorsing the specific proposal, has supported a national minimum tax on individuals with a net worth above $100 million.
The University of California, Berkeley's Henderson argued that the tax was ethically and legally problematic, either due to the fundamental nature of a wealth tax or because of its retroactive form. He claimed that the $300 million campaign against Proposition 42 and efforts to put it on the ballot were able to 'deceive voters' by suggesting the tax would expand beyond billionaires.
Supporters of the tax proposal, including progressive politicians like Sanders and Elizabeth Warren, have long advocated for a federal wealth tax. However, Newsom has expressed concerns that a California wealth tax could disadvantage the state.
In a recent filing, Mark Zuckerberg, whose net worth totals more than $200 billion, considered leaving the state to avoid the proposed tax on billionaires. The filing highlights how one of the world’s wealthiest individuals is bracing for the possibility that California voters pass Proposition 42, which would primarily fund healthcare.
The measure faced significant opposition, with commercials warning about potential losses in future tax revenues if billionaires were to leave the state. One billionaire businessman said the proposition made him feel 'a little bit like I wasn't wanted'.
Despite the rejection, supporters of the billionaire tax proposal have not ruled out bringing the measure back before voters in 2028 if state lawmakers fail to find an alternative.

What's still developing

“The specific proposal had a lot of really strange structural issues,” she said, noting that it would have retroactively applied to any California resident who was a billionaire as of Jan. 1, 2026, and that it taxed everything a billionaire owned — from cars and yachts to art and collectibles — some of which could be difficult to place a value on.
“In Trump’s America, working people pay more than they should, while billionaires are so unburdened that they are becoming trillionaires. In the America we seek, billionaires and trillionaires will pay their fair share, while working people will be unburdened,” he told The Guardian last month.
SACRAMENTO, Calif. (AP) — Mark Zuckerberg made a deal with Meta's board to help him pay a proposed California tax on billionaires without losing his ownership stake in the company he founded, according to regulatory filings published this week.
Start with a basic question: How much do billionaires pay in taxes?
New borrowing accounted for only 2.4 percent of total economic income for the top 0.01 percent of wealth holders in 2022.
This is a 14-point difference in one of the central figures used to make the case that billionaires are undertaxed.
Zuckerberg, Meta's CEO, previously told the company he was considering moving his primary residence outside California because of Proposition 40, a ballot initiative that would impose a one-time tax equal to 5% of net worth on billionaires who were California residents on Jan. 1, 2026, if approved.

Sources

CalMatterslink
EdSourcelink
Fox Businesslink
University of California, Berkeleylink
Dailybruinlink
PBSlink
Ibtimeslink
Statelinelink
Breitbartlink
BBClink
Americanbazaaronlinelink
Los Angeles Timeslink
Ottumwacourierlink
Ocregisterlink
Fox Businesslink
ABC News — video link
Fair Question — video link
The Hill — video link
CNN — video link
NBC News — video link
ABC7 — video link