Overview
- Proposition 40 is certified for the November ballot and would impose a one-time 5% tax on individuals with wealth over $1 billion, applied to residents as of Jan. 1, 2026 and payable in 2027 with a multi-year payment option.
- This week the California Democratic Party and the California Labor Federation endorsed the measure even as several major unions and top Democrats publicly oppose it, creating an unusual split inside the party and the labor movement.
- A well-funded opposition campaign led by the Building a Better California PAC and large donations from Sergey Brin has poured tens of millions of dollars into defeating the measure, making outside spending a central part of the fight.
- Gov. Gavin Newsom has taken a high-profile stance against Prop 40, arguing it could push wealthy residents out of state and proposing a federal wealth tax as an alternative, a position that critics say risks political costs for him.
- Policy questions driving the debate include how to value complex wealth, the retroactive Jan. 1, 2026 application, the cost and structure of the five-year payment option, and nonpartisan warnings that the tax could raise near-term revenue while reducing future income-tax receipts if wealthy taxpayers leave.