Sergey Brin's Home State Voters Turn Down 5% Billionaire Tax
California rejected Proposition 40, a one-time levy that supporters said would have generated $103 billion to cover Medicaid shortfalls from federal tax changes.
By Kofi Costa ·
California voters rejected a ballot measure that would have imposed a one-time 5% tax on the assets of the state's billionaires. The proposal, known as Proposition 40, lost to a wave of negative advertising funded by wealthy residents who opposed the levy.
The measure targeted more than 200 individuals. Advocates estimated the tax would raise $103 billion. They planned to direct 90% of that revenue toward state healthcare funding holes created by President Donald Trump's 2025 tax law. Suzanne Jimenez, chief of staff for SEIU-United Healthcare Workers West, described the calculation as simple arithmetic to reach the $100 billion target.
Opponents, including Google co-founder Sergey Brin, launched two rival ballot initiatives to cancel Prop 40. Critics argued the tax would drive wealthy residents out of the state, reducing the overall tax base. Democratic Gov. Gavin Newsom supported this view, claiming billionaires would eventually leave and stop paying annual income tax. Backers countered that few showed signs of departing during the campaign.
The tax included a retroactive provision applying to residents as of January 1, 2026. This clause was designed to prevent wealthy individuals from dodging the bill by changing their residency status after the announcement. Several billionaires, including Brin, had already moved out of California in hopes of establishing residency elsewhere. Legal experts expected challenges to the retroactive clause if the measure had passed.
The debate touched on how much tax the ultra-rich actually pay. Much of their wealth sits in unrealized capital gains, which are not taxed until sold. A paper published last year by University of California, Berkeley, economist Emmanuel Saez and co-authors found the richest Americans paid an effective tax rate of 24% between 2018 and 2020. That figure was lower than the 30% rate paid by the general population.
Saez helped draft Proposition 40. He told reporters that a victory would have signaled a shift in democratic power. He predicted other states would follow suit with similar ultrarich wealth taxes. He also said the issue would move to the center of the Democratic presidential primary debate on federal taxation.
With the vote decided, the state retains its current tax structure for the billionaire class. The funds intended for healthcare shortfalls remain unfilled by this specific levy.
