What Proposition 40 would do

Taxing billionaires moves from idea to ballot in November, when Californians vote on Proposition 40, a one-time 5% tax on the wealth of billionaires residing in the state on 1 January 2026. Six Nobel Prize-winning economists endorsed the measure in an open letter, calling it the first-ever tax on billionaire wealth enacted anywhere in the world.

The Nobelists wrote that the vote may well come to be seen as a turning point in the battle between democracy and oligarchy, and could kickstart a similar movement in other states, at the federal level and abroad. The money involved is large:

• •As of early October, 260 billionaires lived in California, with nearly $2.5tn in wealth, according to the Forbes billionaires' list.
• •A 5% tax on that pool would raise about $110bn.
• •Much of the revenue would go to replacing Medicaid funding removed by Trump's One Big Beautiful Bill Act the previous year.

Why supporters say billionaire wealth must be taxed

The case for the measure rests on how concentrated American wealth has become. The richest 1% of Americans hold over 31% of the nation's total wealth, about $55tn in net worth. A recent research paper found that the richest 384 US oligarchs paid only 24% of their economic income in 2025, compared with 30% for the average taxpayer. Reporting by ProPublica has revealed that some of the richest Americans, among them Elon Musk, Jeff Bezos, Warren Buffett and Michael Bloomberg, live largely tax free.

Daniel Kahneman and Angus Deaton, both Nobel laureates, proposed that rising income lifts emotional wellbeing only up to a ceiling of about $115,000 in today's money. Economists Erick Zwick of the University of Chicago and Owen Zidar of Princeton calculate that restoring the tax schedule to where it stood in the Clinton administration 30 years ago would raise $5tn over a decade.

The opposition: Newsom, Brin and counter-propositions

Governor Gavin Newsom, virtually certain to run for the Democratic nomination ahead of the 2028 presidential election, opposes Proposition 40, as does Xavier Becerra, the Democrat running to succeed him. Both fear the tax will spark a flight of the oligarchs to lower-tax jurisdictions.

Google co-founder Sergey Brin has helped coordinate some $200m to oppose the measure and promote two countervailing propositions, 41 and 42. Those measures would bar retroactive taxes, putting wealth accumulated in the past off limits, and forbid new taxes on financial assets or other personal property. Brin has said Proposition 40 reminds him of the Soviet Union, which he fled with his parents in 1979.

If wealth is already moving, the opponents point to names. Before the end of 2025, Brin and Larry Page moved many of their business interests out of California and bought homes out of state. Former Uber CEO Travis Kalanick left for Texas, and Peter Thiel moved his residence to Miami last year.

Do billionaires really move? The evidence

The research on billionaire migration cuts both ways. Enrico Moretti of UC Berkeley and Daniel Wilson of the Federal Reserve Bank of San Francisco found that the location of the very rich is highly sensitive to estate taxes. Their starting point was Bush's 2001 Economic Growth Tax Relief and Reconciliation Act, which eliminated the federal credit that had offset the estate tax burden states imposed on the ultra-wealthy.

What followed gave the flight argument some of its strongest numbers:

• •By 2010, over a fifth of Forbes 400 billionaires originally living in a state that levied an estate tax had moved to a state without one, while only about 1% moved the other way.
• •By 2017, states with estate taxes had lost 23 of the 72 Forbes 400 billionaires who lived there in 2001.
• •Forbes 400 wealth subject to state estate taxes fell from some $203bn in 2001 to about $122bn 16 years later.

Other evidence points the opposite way. A Cornell sociologist and a Treasury Department economist found that the 2017 Tax Cuts and Jobs Act's SALT cap had almost no impact on the migration rates of the affluent, at least in the first year after the change.

New York's continued density of wealth is often cited in this context: the state has 154 billionaires according to Oxfam, second only to California, even though its combined top rates - 3.9% in New York City on top of a 10.9% state tax - far exceed Miami's zero. California's top marginal rate is 13.5% against Florida's zero, a gap Moretti describes as enormous.

Asked whether top scientists and engineers leave high-tax states, Moretti said that some do - though, in his words, "People do leave" - and that those who move are highly paid workers rather than billionaires.

Supporters of Proposition 40 argue the tax's own timing prevents flight: the initiative became known in late November 2025, and the window before 1 January 2026 is so short that it is unlikely any significant number of billionaires successfully cut ties with the Golden State. Between January and October, indeed, the number of billionaires living in California grew by 20.

The question may be settled as much in court as at the ballot box. Optimistic analyses assume billionaire avoidance will shrink the taxable wealth pool by about 10%, but the tax faces challenges on grounds that retroactive taxation violates due process, it exempts real estate, and foreign billionaires may invoke double taxation treaties; it may not survive litigation. Stanford economists have concluded the new tax would raise only around $30bn, while the flow of lost income tax revenue would cost the state nearly $39bn in net present value.

A September poll found Proposition 40 falls just short of majority approval. The vote takes place in November, and the outcome will determine whether the first tax on billionaire wealth anywhere takes effect at all.