VOTE YES ON PROP 40
Vote Yes on Prop 40. Extraordinarily wealthy billionaires can support a shared need: care that is available when a person or family needs it.
The facts at a glance
Wealth and annual income are different tax bases. [1][2]
A sale and an increase in an unsold asset’s value are different tax events. [2]
Prop 40’s proceeds have designated healthcare, education, and food purposes. [1]
Income is what comes in; wealth is what someone owns
A paycheck is income. Shares, business ownership, and other assets contribute to wealth. A person can hold highly valuable assets without selling them all or receiving their full value as income that year.
The IRS explains capital gains in terms of the difference between the proceeds of a sale and the asset’s adjusted basis. A rise in the value of an unsold asset is not the same event as realizing that gain through a sale. Exceptions and other tax rules exist, but the basic distinction is essential. [2]
Why the distinction matters at billionaire scale
Consider a hypothetical holding bought for $100 million that becomes worth $1 billion while the owner keeps it. The owner has a much more valuable asset. That does not mean the entire $900 million increase has automatically become a realized capital gain from a sale. [2]
Prop 40 targets covered net worth rather than waiting for every asset to be sold. It contains rules for measuring that wealth, including publicly traded shares and nonpublic interests, while excluding specified assets. [1]
Federal rules can also affect inherited gains
The IRS says inherited property generally receives a basis equal to fair market value at death, or an applicable alternate valuation. That can change which gain is recognized when an heir later sells. There are exceptions, and estate taxation is a separate question. [3]
This is why “they already pay income tax” does not fully answer a proposal aimed at accumulated wealth. The taxes address different bases and different events. Whether to ask wealth to contribute is a policy decision—not a confusion between income and assets.
Washington’s choices make the question more urgent
The federal law commonly called the “One Big Beautiful Bill” changed healthcare funding while extending or expanding tax reductions for the wealthiest Americans. One example documented by the IRS is the $15 million basic estate-and-gift-tax exclusion for 2026. CBO separately describes the law’s projected cuts to Medicaid spending. [4][5]
We think California should respond by protecting care, not by accepting that families must absorb the consequences of healthcare funding cuts.
What Prop 40 asks—and what it leaves
At Prop 40’s full 5% tax rate, a hypothetical $2 billion in covered net worth produces a $100 million principal tax before any other relevant adjustments. Ninety-five percent of that starting covered value remains before payment charges, other taxes and market changes. This arithmetic illustrates the rate; it does not predict the taxpayer’s future wealth. [1]
The measure includes a phase-in near the threshold and payment options. It does not assume that all covered assets are cash or that the tax applies identically to every possible holding. [1]
A contribution with an identified purpose
After administrative expenses, 90% of funds go to healthcare and 10% to public education and food assistance. The healthcare funds are directed to support coverage and providers and help prevent closures and service cuts. [1]
Our recommendation is a matter of priorities: a modest tax on extraordinarily wealthy billionaires can protect essential services. Protecting care is worth asking those with the greatest resources to help finance it.
A few more answers
Does this mean billionaires never pay tax?
No. The distinction is between accumulated wealth and realized income. This page makes no claim that every billionaire pays no taxes or has the same tax circumstances.
Is 5% charged only on the amount above $1 billion?
No. The statute uses total covered net worth. The detailed calculation is not a simple marginal tax on only the excess. [1]
The people and institutions behind the evidence
source publisher; not a campaign endorser
Internal Revenue Service
Provides the cited tax guidance. Its guidance is not an endorsement of Proposition 40. [2]
Working-paper author and disclosed unpaid design/scoring adviser
Emmanuel Saez
The July 2026 explanatory report identifies Emmanuel Saez with UC Berkeley. He coauthored the revenue paper and discloses unpaid design/scoring advice. [6] [7]
Working-paper author
Gabriel Zucman
Coauthor of the 2026 billionaire-wealth and revenue working paper. [7]
People and organizations backing a Yes vote
Support reported by SEIU-UHW
Robert Reich
Robert Reich supports California Proposition 40 (2026).
SEIU-UHW publishes a supportive statement attributed to Robert Reich. [8]
Campaign-reported support
U.S. Senator Bernie Sanders
Bernie Sanders supports California Proposition 40 (2026).
Named in the campaign’s August 18 supporter roster. [9]
Keep reading
THE PAIRED PAGE
Why Act in California Instead of Waiting for Washington?
Read the detailed page →
WHY VOTE YES
A Billionaire Tax—Not a Tax on Ordinary Paychecks
Read the detailed page →
WHY VOTE YES
How Billionaires Can Pay Without Paying Everything at Once
Read the detailed page →
WHY VOTE YES
Help Keep Hospitals, Clinics and Emergency Rooms Open
Read the detailed page →
CHECK THE EVIDENCE
Sources behind this page
Each reference identifies what it establishes. A cited agency or researcher is not automatically a campaign endorser.
01Proposition 40: text of proposed laws
California Secretary of State · 2026 voter guide · Proposed law
The actual proposed rules on taxpayer eligibility, valuation, payments, spending, and reporting. Tax payments begin in 2027; audit authority and special trust rules remain. Section 50310 governs possible amendments.
Where to look: Gov. Code §16355, PDF pp. 4–5; Rev. & Tax. Code §§50301, 50303–50304, 50308–50312, PDF pp. 5–13.
https://vig.cdn.sos.ca.gov/2026/general/pdf/prop40-text-proposed-laws.pdf
02Topic no. 409: Capital gains and losses
Internal Revenue Service · Undated; checked September 10, 2026 · Official tax guidance
Explains sale proceeds, adjusted basis, and capital gains; used for the distinction between wealth and realized income.
Where to look: Opening explanation of capital assets and realization
https://www.irs.gov/taxtopics/tc409
03Gifts and inheritances: basis of inherited property
Internal Revenue Service · Undated; checked September 10, 2026 · Official tax guidance
Explains the usual inherited-property basis rule and exceptions. Not a statement that every estate escapes all taxation.
Where to look: Answer: basis of inherited property
https://www.irs.gov/faqs/interest-dividends-other-types-of-income/gifts-inheritances/gifts-inheritances
04What’s new — Estate and gift tax
Internal Revenue Service · Live guidance checked September 10, 2026 · Official tax guidance
Public Law 119-21 increased the federal estate and gift tax exclusion to $15 million for 2026. This is one documented tax benefit for large fortunes; it does not mean only billionaires received tax reductions.
Where to look: Working Families Tax Cuts; basic exclusion amounts
https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax
05The Budget and Economic Outlook: 2026 to 2036
Congressional Budget Office · February 2026 · Official federal budget analysis
Explains the enacted 2025 reconciliation law’s tax and Medicaid changes. The law retained a 37% top income-tax rate rather than the scheduled 39.6%, and CBO projected $1.2 trillion less federal Medicaid spending over 2026–2035. These are comparisons with the prior-law baseline—not a claim that all healthcare spending ended.
Where to look: Chapter 5 and Appendix A: the 2025 reconciliation act
https://www.cbo.gov/publication/62105
06The California Billionaire Tax: an expert report
Brian Galle, David Gamage, Emmanuel Saez, and Darien Shanske · Updated July 20, 2026 · Proponent expert report
The proposal’s drafters explain its funding estimates, payment installments, and qualifying deferral arrangements.
Where to look:
https://eml.berkeley.edu/~saez/galle-gamage-saez-shanskeCAbillionairetaxJuly26.pdf
07California Billionaires: Wealth, Taxes, and Wealth Tax Revenue Estimates
Jasper Boll, Emmanuel Saez, and Gabriel Zucman · 2026 working paper; author-hosted version checked September 10, 2026 · Working paper
Working-paper estimate, not observed collections or an institutional NBER endorsement. Saez discloses unpaid design/scoring advice. The downloaded version has differing cover/abstract revision labels; no single revision date is asserted.
Where to look: Abstract and disclosure, PDF pp. 1–2.
https://eml.berkeley.edu/~saez/BSZ26CAbillionaires.pdf
08Billionaire Tax Act — Supporters Speak Out
SEIU-UHW · Undated; checked September 10, 2026 · Allied-organization support record
Publishes supportive statements from Robert Reich, Bernie Sanders, and Chris Murphy. These are SEIU-reported statements, not independent recordings verified here.
Where to look: Named supporter statements
https://www.seiu-uhw.org/billionaire-tax-act-supporter-content/
09Rep. Ro Khanna, California Unions Unite on Stage in San Jose for Rally in Support of Prop 40
Yes on 40 · August 18, 2026 · Campaign report
The campaign’s report of the San Jose rally and participating supporters, including Ro Khanna. It also identifies support from Bernie Sanders and CIR/SEIU.
Where to look:
https://yeson40.com/rep-ro-khanna-california-unions-unite-on-stage-in-san-jose-for-rally-in-support-of-popular-prop-40/
About this page. Published as a review draft by the Yes on 40 campaign, which advocates passage of the measure. Sources were checked on September 10, 2026. Research estimates, proposed legal provisions and endorsements are identified separately. This page is not individual tax or legal advice. Send corrections with the relevant source to the campaign’s press contact.
Vote Yes on Prop 40.
Vote Yes on Prop 40. Ask billionaires to help protect the healthcare California needs.