A Billionaire Tax—Not a Tax on Ordinary Paychecks

VOTE YES ON PROP 40

Vote Yes on Prop 40. California can ask people with extraordinary wealth to help protect care and avoid taxing the wages most families live on. Many billionaires already pay a lower tax rate than the vast majority of ordinary Californians.

The facts at a glance

Prop 40’s individual tax is targeted at billionaire-level statutory net worth. [1]

A below-threshold declaration is different from submitting a full asset inventory. “For taxpayers declaring net assets of $1 billion or less, Prop 40 does not require an itemized list of every asset with the return.” [1]

Directly held real property and specified retirement assets have express exclusions. [1]

Who is actually covered?

The measure defines applicable individuals by a billionaire-level net-worth threshold and California residency on the tax-obligation date, with separate rules for applicable trusts. [1]

One billion dollars is one thousand million dollars. That scale is vastly different from an ordinary salary, a family home, or typical retirement savings. The measure does not impose a new tax on anyone simply because they live, work, or own assets in California. It only taxes California residents who have over $1 billion in net worth. [1]

The threshold is not a new tax on the middle class

A person below the covered wealth threshold is not liable for the tax—period. For taxpayers who are covered (around 200 individuals out of 39 million Californians), business interests, securities, and other included assets help determine statutory net worth, subject to the measure’s exclusions and debt rules. [1]

The full 5% is not simply a tax on the dollars above $1 billion. The rate applies under the statute’s whole-net-worth and phase-in rules. Keeping that detail accurate does not change the main point for ordinary households: this is a billionaire-level wealth tax. [1]

What about my home and retirement?

If you are one of the 39 million Californians who have a total net worth less than $1 billion, then this tax doesn’t apply to you, your home, or your retirement savings. In fact, those investments are also mostly excluded for billionaires too: section 50303(c)(4) excludes interests in real property held directly or through a revocable trust. That is more precise than saying every real-estate-related business holding is automatically excluded; business ownership can follow different valuation rules. [1]

The statute also exempts qualified pensions and individual retirement arrangements, with specific treatment for Roth-type accounts: the exclusion does not extend to aggregate value above $10 million under that provision. Ordinary retirement savings should not be confused with those exceptional balances. [1]

A declaration is not an itemized inventory

For the 2026 return, section 50301(d) distinguishes declaring that net assets are worth no more than $1 billion from filing the additional tax forms, appraisals, and valuation evidence associated with tax owed. The below-threshold declaration is not a requirement that every resident submit a list of every asset. [1]

The Franchise Tax Board retains audit authority when it reasonably believes tax should have been paid. We therefore do not promise that nobody below the threshold can ever be asked for supporting information. The claim that all taxpayers will have to provide an inventory of their assets is false—but doesn’t preclude the existence of tax administration and regulation. [1]

Why this matters to the Vote Yes case

After administrative expenses, the funds are allocated 90% to healthcare and 10% to public education and food assistance. The healthcare funds can be used to protect coverage and providers and help prevent closures and service reductions. [1]

The proposal connects an unusually concentrated source of wealth with a widely shared need for care. That is why the distinction between billionaire wealth and ordinary income is central—not a technical footnote.

A few more answers

The people and institutions behind the evidence

People and organizations backing a Yes vote

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CHECK THE EVIDENCE

Sources behind this page

Each reference identifies what it establishes. A cited agency or researcher is not automatically a campaign endorser.

Vote Yes on Prop 40.

Vote Yes on Prop 40. Ask billionaires to pay their fair share—so ordinary families can get the care they need.

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