California voters reject billionaire wealth tax

California voters were rejecting Proposition 40, a one-time 5 percent levy on residents worth more than one billion dollars, as election officials continued counting ballots on Wednesday. With roughly 60 percent of votes tallied, the Billionaire Tax Act stood at 44.4 percent support against 55.6 percent opposed, Newsweek reports.

The measure, sponsored by the SEIU's healthcare workers wing, divided the Democratic establishment itself. Governor Gavin Newsom opposed it, warning that taxing billionaires at state level would push wealthy residents out of California — a state that already watches the annual outflow to Texas and Florida in its income tax statistics. Bernie Sanders called it the most important ballot measure in America. Google co-founder Sergey Brin put 102 million dollars into Building a Better California, the spending group leading the opposition and simultaneously advancing two rival measures on the same ballot.

Both sides' arithmetic diverged on the numbers that matter. Supporters estimated around 100 billion dollars over five years, with 90 percent earmarked for healthcare. The nonpartisan Legislative Analyst's Office put the yield at tens of billions — and noted that if some billionaires leave, the state would lose roughly a billion dollars a year in income tax on top.

A one-time levy on net worth, unlike an annual wealth tax, could in principle be paid and forgotten. But the richest taxpayers are precisely those with the cheapest exit option, and the state budget already absorbs federal healthcare funding cuts the union said the tax would offset. SEIU-UHW's chief of staff Suzanne Jimenez signalled the union will return in 2028 if Sacramento does not deliver what billionaires will not fund voluntarily.

Unlike an annual levy, the tax was due in 2027 with payments spread over five years — at a surcharge, according to the Legislative Analyst's Office. The union has two years to decide whether that structure was the problem.