Facts on Prop 40

Only billionaires pay the tax. The measure itself sets the threshold at $1 billion.

Don’t fall for claims that Prop 40 can be turned into a tax on everyone. If your total assets are below the $1 billion threshold, you do not owe the billionaire tax. [2]

The measure’s amendment rule requires a two-thirds vote in each house of the Legislature, just as hard as passing any new law, and any changes must stay consistent with the Act’s purpose: raising revenue through a one-time tax on billionaire wealth. [3] To put it simply: the legislature cannot change Prop. 40 to apply to anyone but billionaires.

Vote Yes on Prop 40. Make billionaires pay their fair share instead of asking working Californians to pay more.

No. Prop 40 is a tax on billionaires only. Prop 40 does not impact working Californians’ homes, retirement accounts, or assets.

If you’re not a billionaire (meaning your total assets are below the $1 billion threshold), you will not pay the billionaire tax. Only billionaires need to fill out the detailed asset forms and valuations, because only they will pay the tax. [3]

Vote Yes on Prop 40 to protect healthcare — it will have no impact on working Californians’ homes or retirement savings.

Trump’s “One, Big Beautiful Bill” created a healthcare crisis that California has to deal with now.

Massive federal cuts are expected to strip roughly $100 billion from California healthcare over five years. Those cuts were passed to help pay for tax breaks that overwhelmingly benefit wealthy households. Prop 40 is the only realistic solution to replace that lost funding and protect care for millions of Californians. [13] [27]

California’s health department warns that about 2 million people who rely on Medi-Cal are at risk of losing coverage under new federal rules. Clinics have already reduced services, and hospitals across the state have announced layoffs while preparing for funding losses.[6] [29] [30]

Vote Yes on Prop 40 to protect healthcare and make billionaires pay their fair share.

Prop 40 is designed as an emergency response to the immediate healthcare crisis. It is not a permanent tax. Nor is it designed to fix every problem in California.

Federal healthcare cuts are expected to cost California $100 billion over five years. Researchers estimate a one-time 5% tax on billionaire wealth would raise about $100 billion—roughly matching the scale of the emergency. [4] [13]

Billionaires paying their fair share will prevent the closures of hospitals and clinics, and keep healthcare affordable for millions of Californians. It will also protect healthcare coverage for up to 3.4 million Californians, helping curb premium increases that are already slamming patients and businesses across the state.

Vote Yes on Prop 40 for a targeted, one-time response that makes billionaires pay their fair share when California needs it.

Don’t bet on it. Billionaires know California has been key to building their wealth, which is why our state has even more billionaires than we did a year ago. They and their enterprises have benefited from California's world-renowned universities and research centers, innovation economy, and highly educated workforce.

Some billionaires have made a big fuss, but few have left.

Besides, moving after January 1, 2026 does not avoid the tax under the filed measure. Prop 40 applies based on California residency on January 1, 2026. Billionaires who were California residents on that date cannot simply move later in the year and avoid the tax. [3] There are no longer incentives to leave. Even if billionaires try to challenge Prop 40 in court, they’ll still need to pay the tax while their complaint is under judicial review.

The state’s independent Legislative Analyst’s Office still expects tens of billions of dollars in new revenue, even after accounting for possible moves and tax avoidance. It estimates possible ongoing income-tax losses of less than $1 billion per year. [1]

And prominent billionaires and investors have publicly said they are staying. NVIDIA’s Jensen Huang told people, “Move to California. Don’t leave.” Vinod Khosla said he had no plans to leave, and Chamath Palihapitiya said he would stay, build companies, and keep hiring here. [23] [24] [25]

Vote Yes on Prop 40. The official fiscal analysis still estimates tens of billions of dollars in new revenue over several years, even while accounting for possible moves and tax avoidance.

Prop 40 would direct 90% of its new revenue to healthcare—the same part of the economy facing major job losses from federal Medicaid cuts.

UC Berkeley Labor Center researchers modeled deep Medi-Cal cuts and estimated California could lose up to 217,000 jobs total, including roughly 145,000 healthcare-sector jobs. Because Prop 40 directs 90% of its program funding to healthcare, that funding could help offset the pressure those cuts put on hospitals, clinics, healthcare workers, suppliers, and local businesses. [7] [3]

And small businesses will see healthcare costs for workers skyrocket if Proposition 40 does not pass, making them less able to hire and retain workers, grow, and compete in the global market. Next year, employers nationally are slated to face the biggest health insurance premiums in at least 20 years, an estimated average increase of 11% per worker. Seventeen million Californians receive health benefits from their employer, and state premiums are already rising faster than the national average.

The California Federation of Labor Unions supports Prop 40 in part because protecting healthcare also protects jobs and local economies. [10]

Vote Yes on Prop 40 to protect healthcare, jobs, and the communities that depend on both.

No. The real danger for California businesses are the impacts of the massive federal cuts to healthcare funding.

Businesses depend on a functioning healthcare system. Berkeley’s jobs research shows that healthcare cuts ripple into suppliers, restaurants, retailers, and other local employers. [7]

Small business owners are already facing skyrocketing health insurance premiums – plans that 17 million Californians rely on. Lives and livelihoods are at risk. In 2027, employers nationally are projected to see an average increase in health insurance premiums of 11% per worker – the largest spike in at least 20 years. California premiums are already rising faster than the national average.

Prop 40 taxes billionaire wealth—not California businesses, startups, payrolls, or sales.

For billionaire owners whose wealth is tied up in a company, Prop 40 includes installment payments and special rules for hard-to-value assets. [5]

California remains the center of American venture capital and innovation. PitchBook data reported by the Los Angeles Times show California-based companies attracted more than $366 billion in venture capital so far in 2026—around 90% of U.S. venture investment and more than three times all other states combined. [31]

Vote Yes on Prop 40 to protect the workers, care, and local economy that help California businesses thrive.

Billionaires got more tax breaks. California families shouldn’t face cuts to our healthcare to pay for them.

The “One, Big Beautiful Bill” slashed Medicaid funding while giving massive tax cuts to ultra-rich households. The Institute on Taxation and Economic Policy estimates California’s richest 1% receive a $7.3 billion tax break in 2026. [21] [27]

Billionaires should pay their fair share to ensure that we keep our clinics, hospitals and ERs open and that millions of Californians don’t see healthcare costs double.

Right now, billionaires pay much less in taxes than the rest of us.

They pay about 0.2% of their wealth in California income tax. That is the annual average researchers estimate California billionaires paid in state individual income tax in 2023–2025. Their estimated total annual taxes—federal, state, local, and corporate—were about 1.1% of wealth over the same period. [33]

Billionaires can hold shares while they rise in value without paying income tax on that increase. They can borrow against those shares instead of selling them, and inheritance rules can allow decades of gains to escape income tax. [16]

Billionaires’ fortunes have still surged. The latest NBER revision estimates California billionaire wealth reached about $2.3 trillion by mid-2026 and grew 144% from 2023 to 2025. A one-time 5% tax is small compared with that extraordinary growth. [33]

Vote Yes on Prop 40. Make billionaires pay their fair share so California can protect healthcare.

No, they can’t.

Prop 40 is written with a number of strong provisions to make sure billionaires can’t avoid paying. The law applies to any billionaire who was a resident of the state as of January 1, 2026.

Tax law scholars who helped design Prop 40 argue that California has strong legal authority to tax billionaire wealth.

Brian Galle, David Gamage, and Darien Shanske point to long-standing state taxing powers and explain why federal constitutional limits on a federal wealth tax do not automatically apply to state taxes. [8]

Courts have also upheld tax laws that look back to the beginning of the year, including cases discussing the 1913 federal income tax. Prop 40’s legal team points to that history in addressing the January 1 residency rule. [8]

Under the filed measure, a billionaire who was a California resident on January 1, 2026 does not erase the tax obligation simply by moving later. Legal challenges are treated separately: the measure expressly allows a facial challenge to proceed without first paying the disputed tax. [3]

Vote Yes on Prop 40 to use California’s power to protect healthcare and ask billionaires to pay their fair share.

Billionaire wealth includes other assets beyond cash.

Many billionaires already fund their lavish lifestyles by taking out loans on their enormous assets. If desired, they can do the same thing to pay the tax.

Prop 40 allows the tax to be paid over five years, with an additional charge on the unpaid balance. It also includes a deferral option for qualifying assets that are difficult to turn into cash. [3]

The measure sets valuation rules for business interests and other assets, and allows certified appraisals in appropriate cases. [5]

Vote Yes on Prop 40. Billionaires can pay their fair share without pretending every dollar of wealth is sitting in a checking account.

The rules for the new money are written into the measure.

From the new tax revenue, 90% goes to healthcare and 10% goes to public K–14 education and food assistance. The measure bars using the money to replace existing funding for those purposes and requires annual reporting to the Legislature. [3]

That means the money raised to respond to the healthcare crisis comes with written spending rules and public reporting requirements.

Vote Yes on Prop 40 for new healthcare funding with clear rules on how it must be used.

No. Prop 40 raises new money and gives public education a share of it.

From the revenues raised from the tax on billionaires, 90% goes to healthcare. The other 10% goes to K–14 public education and food assistance. The measure bars using the money to replace existing funding for those purposes. [3]

Prop 40 does not take money away from schools — in fact it provides additional funds for schools. The majority of new money raised as Prop 40 prioritizes backfilling federal massive cuts to California healthcare that will double costs and eliminate care for millions. Education is not facing that loss in funding. [2]

United Teachers Los Angeles and the California State PTA have endorsed Prop 40, citing the urgent needs facing children and families across healthcare, education, and basic needs. [12]

Vote Yes on Prop 40 to raise new money for healthcare, public education, and food assistance.

Prop 40 has overwhelming support from workers, Democrats, unions, parents, and community leaders across California.

The California Democratic Party endorsed Prop 40. The organization represents more than 10 million voters. [11]

The California Federation of Labor Unions, AFL-CIO endorsed Prop 40. The federation represents 1,300 unions and 2.3 million members. [10]

The California State PTA endorsed Prop 40. The organization represents more than 550,000 members across California [12]

Senator Bernie Sanders and Congressman Ro Khanna support Prop 40. They have publicly joined California workers in calling on billionaires to help protect healthcare. [15]

SEIU-UHW, AFSCME California’s PEOPLE Committee, and the Committee of Interns and Residents / SEIU support Prop 40. [13] [14] [15]

Oxfam America endorses Prop 40. Its California wealth research argues that billionaires can help support healthcare, public education, and food assistance. [28]

Vote Yes on Prop 40. Join the millions of Californians demanding billionaires to pay their fair share and protect healthcare.

Prop 40 is a California solution to a California healthcare crisis.

This crisis was created by the massive healthcare funding cuts in Trump’s “One, Big Beautiful Bill,” and there is no other realistic solution except for Prop 40.

Some opponents, including Governor Gavin Newsom, say billionaire taxation should happen nationally instead. A federal approach would require the support of Congress and the President. But California is used to leading the way. Prop 40 is already on the California ballot and gives California voters a way to respond to federal healthcare cuts now.

Prop 40 is also deliberately limited: it is a one-time, 5% tax, not a recurring national wealth tax. Researchers estimate it would raise $100 billion to help backfill funding lost to federal cuts. [4]

Bernie Sanders and Ro Khanna have advocated taxing billionaire wealth nationally—and both support Prop 40 in California. [15]

Vote Yes on Prop 40 to provide urgent funding for California healthcare instead of waiting for Washington.