Nearly a week after Election Day, it still isn’t clear whether arguably the most significant ballot measure in the country will pass or fail.
The “yes” votes for California’s Proposition 40, commonly known as the “billionaire tax,” are trailing “no” votes by a roughly 6-point margin as of Monday morning, according to The Associated Press. But more than 20% of the state’s ballots remain uncounted, so the AP has not called the race yet.
Prop 40 would implement a one-time 5% wealth tax on the state’s more than 200 billionaires, making it the most aggressive state-level effort to tax the rich in the U.S. Proponents estimate it would raise around $103 billion to offset federal healthcare and food assistance funding cuts under President Donald Trump.
The measure, which was pushed by a California healthcare workers’ union and backed by Sen. Bernie Sanders (I-Vt.), has drawn fierce pushback and hundreds of millions of dollars in opposition advertising from tech titans and other ultra-wealthy residents. Those opponents have claimed it would cause an exodus of wealth from the state and ultimately undermine the tax base.
Although hundreds of thousands of uncounted votes could still tip the outcome, prospects are not looking great for Prop 40’s passage. The measure has fared best in populous Los Angeles County, where “yes” votes hold a 10-point lead, but nearly all votes there have been counted by now.
Most of the outstanding ballots are in areas that have leaned against the measure, including San Diego, Sacramento and the Bay Area, making it difficult for supporters to overcome their deficit. The high share of “no” votes even in Democratic strongholds suggests the negative advertising by opponents had its intended effect.
If Prop 40 fails, it would mark one of the few big-ticket progressive failures in an election that turned out to be a blue tsunami propelling Democrats to House and Senate majorities. And it will have gone down in spite of an electorate full of popular anger at rich elites and their hold on political power.
Even if the measure were to mount a remarkable turnaround in the ballot count, proponents face another major problem: The “yes” votes on a competing ballot measure known as Proposition 42 are narrowly leading, 52% to 48%, although the AP has not called that race either.
Prop 42, which was put on the ballot expressly to negate Prop 40, would prohibit new state taxes on personal property, including financial and business holdings. If both measures pass, Prop 40 would need to get more votes than Prop 42 to become law. (A second competing measure backed by the wealthy is projected to fail.)
Opponents of the billionaire tax put together more than $300 million to defeat it ― the most expensive campaign against a state ballot measure since at least 1999, according to the San Francisco Chronicle. (That sum includes money spent backing the two competing initiatives.)
Prop 40 was sponsored by SEIU-United Healthcare Workers West but proved divisive among some typical allies on the left. The state’s largest teachers union came out against it, as did the state’s Planned Parenthood affiliate. Some groups criticized the proposal for how the funding would be used ― overwhelmingly for healthcare ― and the union for not involving them more in its design.
Gov. Gavin Newsom, a potential 2028 Democratic presidential candidate, also came out against the ballot measure, arguing it would push the wealthy across state lines and starve California of income tax revenue in the future.
Rep. Ro Khanna (D-Calif.), one of the measure’s biggest backers, said on a call with reporters on election night that if Prop 40 loses, it will be because a handful of billionaires “lied” about the tax and had a “self-interest” in defeating it.
“They would be as well off as they were on Labor Day if they had to pay this 5% tax, and millions of California kids wouldn’t lose insurance because this proposition may not pass,” Khanna said. “They lied, but they’re not going to get away with it in 2028, especially after the night we’ve had tonight.”