Proposition 40 — One-Time 5% Tax on Billionaires' Wealth
Current as of October 19, 2026 · voting-clarity.org
November 3, 2026 California ballot. AI-generated analysis. Your sample ballot and official voter guide are the official documents; the links below let you check each claim. This page explains what is on the ballot; it is not legal advice.
Voting Clarity's research is done by Claude, an AI made by Anthropic. Anthropic gave no money to either side of this measure [1].
Summary
Proposition 40 would charge California billionaires, people worth $1 billion or more who were state residents on January 1, 2026, a one-time tax of 5% of their net worth, and send 90% of the money to health care. [2][3][4]
Net worth is measured December 31, 2026; the tax is due in 2027, or over five years at extra cost. [5][6][7][8] The other 10% goes to schools and food aid. None of the money counts toward the state spending limit or the school funding minimum. [4][9][10] The Legislative Analyst's Office (LAO), the Legislature's nonpartisan adviser, says it "probably would" raise "tens of billions of dollars" over several years, but this is "very hard to predict." [11] The Legislature may also change the tax law by a two-thirds vote of each house, if the change "is consistent with and furthers" the measure's purposes. [12] Props 41 and 42 say they conflict with measures like this; if either gets more YES votes, Prop 40 "could be stopped from becoming law." [11]
For: official argument and rebuttal signers Suzanne Jimenez, chief of staff of Service Employees International Union–United Healthcare Workers West (SEIU-UHW), a health care workers' union; Victoria Barron, a patient access specialist at Planned Parenthood of Pacific Southwest; and Denise Robb, a member of a Los Angeles college faculty union. They say it makes billionaires pay "their fair share in taxes" and "will raise about $100 billion" to replace federal health care cuts. [13] Largest funder: SEIU-UHW, the sponsor, $22.08 million (filings through Oct. 16, 2026). [14]
Against: official argument signers René Bravo, M.D., president of the California Medical Association; Francisco Silva, chief executive of the California Primary Care Association; and Debra Schade, president of the California School Boards Association; and rebuttal signers April O'Connor, a teacher with the California Teachers Association; Rob Gutierrez, president of the California Taxpayers Association; and Chris Hannan, president of the State Building and Construction Trades Council of California. They say it "will cost California $25 billion in lost revenue" and "lets the Legislature expand the tax without a vote of the people." [13] Largest funder: Building a Better California, a committee that funds several ballot measures, $118.5 million (filings through Oct. 17, 2026). [15][16]
Your Vote
YES — "The state would collect a one-time tax from billionaires equal to 5 percent of their wealth." [17]
NO — "The state would not collect a one-time tax from billionaires equal to 5 percent of their wealth." [17]
No double negative. It passes with more than half the votes cast. [18][19]
Today vs. if Prop 40 passes
| What | Today | If it passes | Effect |
|---|---|---|---|
| Who is taxed | No wealth tax; billionaires pay income tax [11] | One-time 5% of net worth for Jan. 1, 2026 residents, phased in from $1.0B to $1.1B [2][20] | Billionaires pay; leaving later does not cancel it [3] |
| What counts | Not applicable | Worldwide assets [21]; real estate, pensions, most retirement accounts excluded [6][7]; private firms presumed book value plus 7.5 times profit [22] | Firms valued by formula |
| Paying | Not applicable | Due 2027, or five installments with 7.5% yearly charge [8]; or defer, paying 5% of later withdrawals [23] | Waiting costs more |
| Where the money goes | Over $200B a year in health spending, mostly Medi-Cal, California's low-income health program [11] | Special fund outside spending limit: 90% health, 10% education and food; no "supplant existing state funds" [4][24] | Up to $22.5B a year health, $2.5B other; school minimum does not rise with it [9][10] |
| State finances | Income tax pays for most services [11] | Possible income-tax loss under $1B a year [11] | Gain uncertain |
| Medi-Cal, income tax | Set by current law [25] | Unchanged; wealth tax not deductible [26][27] | No change |
In the law, but not in the official summary
None of these are in the official title and summary [9] or the LAO analysis. [11]
Everyone files. Every 2026 state filer must declare net worth of $1 billion or less, or report tax owed. [28] What this means: non-billionaires get an added step.
Deferral account. A binding contract to pay 5% of later withdrawals; it binds heirs and outlasts a move. [29] What this means: the analysis describes only the five-year option.
60-day lawsuit window. A claim the tax is invalid on its face must be filed within 60 days, in Sacramento. [30][31] What this means: afterward, that challenge is barred.
10-year audit window. The Franchise Tax Board (FTB), the state tax agency, has 10 years after a 2026 return to claim more tax. [32] What this means: reassessment can come late.
Rules without normal rulemaking until Jan. 1, 2028. [33] What this means: FTB rules skip the usual process.
Two-thirds to amend (see Summary). [12] What this means: opponents say it "lets the Legislature expand the tax"; supporters say it "cannot be applied to anyone else." The text does not settle it. [13]
Defense. If the Attorney General declines to defend it, reasonable costs come from the Attorney General's set-aside money. [34] What this means: the state pays.
Who is affected, and who is not
Affected: billionaires resident on Jan. 1, 2026, including a spouse's assets and certain trusts [21][2][35]; every resident who files a 2026 return. [28] Not affected: anyone under $1 billion; non-residents on that date. [2][6]
Key Questions Answered
Does the label match? Partly. The title omits the Constitution change exempting the money from school-funding, reserve and spending-limit rules; the summary includes it. Neither mentions the five-year option. [9][8][10]
What guardrails exist? Spending caps of "up to" $22.5 billion (health) and $2.5 billion (education, food). [24]
Who would get the health care money? The measure does not say who gets the money, and it does not mention immigration status. It sends 90% of the tax money to a health account, and the Legislature decides how to spend it. [4][26] The text gives examples, such as Medi-Cal and other coverage for low- and moderate-income people, and safety-net health care providers. [26] The Legislative Analyst says the state would decide how and when to spend the money, on certain types of services. [11] Who can get Medi-Cal is set by current state law, not by Prop 40. Under that law, an adult age 19 or older who does not have satisfactory immigration status, and who applies for Medi-Cal on or after January 1, 2026, can get only pregnancy-related and emergency care. [25] Adults already enrolled can stay in full-scope Medi-Cal. If they lose it, they can sign up again within three months. [25] No sooner than July 1, 2027, these adults would lose non-emergency dental care, and those ages 19 to 59 would pay a monthly premium of $30 to $50. [25] Children under 19 are not covered by these limits, and some other groups are exempt, such as people who are pregnant and former foster youth under 26. [25] Each of these rules starts only after the state health department certifies that its systems are ready. [25]
Supporters, opponents and funding
YES money. Cal-Access, the state's campaign filing database, shows the main YES committee (it also opposes Props 41 and 42) with $32,465,313 in reported gifts of $5,000 or more, through filings of Oct. 16, 2026. Largest: SEIU-UHW, $22,077,899; its political issues committee, $7,725,664; its political action committee, $2,000,000; Saikat Chakrabarti, president of New Consensus, $201,000; Ross Boucher, retired, $200,000; Hillary Perkins, retired, $100,000. [14]
NO money. Four NO committees report $129,841,020 net of transfers through filings of Oct. 17, 2026. Largest: Building a Better California, $118,500,000; Ripple Labs, $5,000,000; Chris Larsen, executive chairman of Ripple Labs, $5,000,000; the California Business Roundtable Issues PAC (political action committee), $700,000; Daniel Tierney of Wicklow Capital, $200,000. [15][36][37][38] Building a Better California's largest donors are Sergey Brin, a Google co-founder, $102,000,000, and L. John Doerr III, chairman of Kleiner Perkins, $42,000,000. [16]
Details
If more than one passes. Props 41 and 42 each cancel any conflicting measure on this ballot that gets fewer YES votes; Prop 40 could count as conflicting. [39][40][41][42] Prop 40's own rule covers only other billionaire-tax measures. [43]
| Which pass | What happens |
|---|---|
| Only 40, 41 or 42 | That measure becomes law. [43][39][40][44] |
| 40 and 41; 41 gets more YES | Prop 41 becomes law; Prop 40 could be voided entirely. [39][41][11] |
| 40 and 41; 40 gets more YES | The texts don't say; a court could decide. [43][44][45] |
| 40 and 42; 42 gets more YES | Prop 42 becomes law; Prop 40 could be voided entirely. [40][42][11] |
| 40 and 42; 40 gets more YES | The texts don't say; a court could decide. [43][44][46] |
| Only 41 and 42 | Both become law. [39][40] |
| All three; 41 or 42 beats 40 | 41 and 42 become law; Prop 40 could be voided entirely. [39][40][41][42][11] |
| All three; 40 beats both | The texts don't say; a court could decide. [43][44][45][46] |
Prop 41 covers taxes outside the spending limit and Prop 42 taxes on owned assets; Prop 40 is both. [39][40][47]
Sources
Official Voter Information Guide, Prop 40, official title and summary, p. 54
Official Voter Information Guide, Prop 40, Legislative Analyst's analysis, pp. 54–55
Official Voter Information Guide, Prop 40, arguments and rebuttals
Secretary of State (SOS) online voter guide, Prop 40, YES/NO statements
Text of Proposed Laws, Prop 40, Sec. 6, amending Rev. & Tax. Code § 17220(e), p. 138
Cal-Access, Golden State Promise – No on Prop 40 (ID 1486695), read Oct. 19, 2026
Cal-Access, Stop the Squeeze – No on Prop 40 (ID 1485007), read Oct. 19, 2026
Cal-Access, Californians Against Tax Increases – No on 40 (ID 1485228), read Oct. 19, 2026
Text of Proposed Laws, Prop 41, Sec. 4, adding Art. XXIV, Secs. 3, 4(b) and 5, pp. 149–150
Text of Proposed Laws, Prop 42, Sec. 4, adding Art. VIII, Secs. 1(a), 2(a)(2) and 4, pp. 151–152
Text of Proposed Laws, Prop 40, Sec. 4, adding Art. XIII, Sec. 37(a), (e) and (f), pp. 136–137
Reviewed in the original: Prop 40 legal text; the Prop 40 voter-guide pages (title and summary, Legislative Analyst's analysis) and the arguments-and-rebuttals PDF; the Secretary of State's online Prop 40 page; Cal-Access filings for the Yes on 40 committee, all four No committees and Building a Better California (read Oct. 19, 2026). Prop 41 and Prop 42 legal text and analyses, and the Medi-Cal statute, are carried from the published page, which reviewed them.
Could not be reviewed: None for this revision. Cal-Access totals count reported gifts of $5,000 or more; smaller gifts may not be included.