California voters will reject Proposition 40, the so-called California Billionaire Tax Act that would have imposed a one-time tax on the state’s wealthiest residents, NBC News projected Monday.
Among 83% of the expected votes counted, nearly 53% of Californians opposed Prop 40, compared to 47% who supported the proposal.
Prop. 40 sought to require individuals or couples whose net worth exceeded $1 billion as of Dec. 31, 2026, to pay a one-time tax equal to 5% of their wealth.
Supporters of Prop. 40, including Sen. Bernie Sanders and Rep. Ro Khanna, argued that because California has about 250 billionaire residents, the state could raise roughly $100 billion from the tax. They said the revenue would help offset federal funding cuts to health care and nutrition assistance.
But Democratic leaders, including Gov. Gavin Newsom and gubernatorial candidate Xavier Becerra, opposed the measure, arguing that it could provide a temporary boost to state revenue while creating negative long-term consequences.
According to the nonpartisan Legislative Analyst’s Office (LAO), revenue from the billionaire tax could help the state for several years. However, some wealthy residents could leave California, reducing future state tax revenue. The office estimates the measure could eventually reduce state revenues by around $1 billion annually.
“This could mean less money for the state’s General Fund, which pays for many public services, including education, health care and prisons,” the LAO said in its analysis of Prop 40.
The state also would have to spend tens of millions of dollars each year to administer and enforce the tax.
Newsom has said he supports a national billionaire tax but argues a California-only wealth tax would put the state at a competitive disadvantage because wealthy residents could move elsewhere to avoid it.
Becerra has called Prop. 40 “sketchy” and argued the state needs a long-term solution to address health care funding challenges