VOTE YES ON PROP 40
No. Prop 40 does not create a new tax on ordinary California businesses or startup revenue. It taxes the covered net worth of individuals above the billionaire threshold.
The facts at a glance
The taxpayer is an individual who meets the billionaire wealth test. [1]
A business can be part of a billionaire’s personal wealth without the business itself becoming the taxpayer.
Predictions that founders or companies will move are economic forecasts, not the same claim as “Prop 40 taxes businesses.”
FOCUSED CLAIM REVIEW
What the claim gets wrong
Claim reviewed: Proposition 40 directly imposes its billionaire tax on California businesses and startups.
False
The proposed law imposes the tax on individuals who meet its billionaire net-worth threshold. Business ownership can be part of an individual billionaire’s covered wealth, but ordinary businesses and startup revenue are not themselves the taxpayer or tax base. [1]
In fact, California small businesses and startups, especially small businesses are already facing huge increases in health insurance costs thanks to Trump’s “Big, Beautiful Bill.” Seventeen million Californians receive healthcare benefits from their employers. [5] Nationally, employers are slated to face the largest spikes in premiums in at least two decades. [6] Further increases could force small business owners to absorb these extra costs, reduce benefits for employees, or be priced out of coverage altogether.
This verdict does not mean Prop 40 could have no indirect economic effects. Claims about investment, founder location, or company behavior are separate forecasts and should be evaluated on their own evidence.
Who actually owes the tax?
The official summary and proposed law identify the covered taxpayer by personal net worth. Ordinary businesses and startups are not a separate class of taxpayer under Prop 40. [1]
What if a billionaire owns a company?
The value of company shares can count toward that billionaire’s wealth. That means a billionaire founder may have personal tax liability. It does not turn the company’s sales or payroll into the tax base.
What about entrepreneurship claims?
Claims that founders will move, investments will fall, or startups will leave are predictions about behavior. They depend on assumptions. They should be evaluated separately from the factual question of who the law taxes.
Why this distinction matters
“A billionaire founder may owe the tax” and “Prop 40 taxes California businesses” are not the same statements. The first can be true under the measure. The second misstates who the taxpayer is.
Vote Yes on Prop 40.
Protect California healthcare, and make billionaires pay their fair share.
SOURCES
Check the evidence
01Proposition 40: text of proposed laws
The proposed law: who pays, covered wealth, valuation, and payment rules.
02Proposition 40: official title and summary
The official summary of the billionaire threshold and main tax design.
03The California Billionaire Tax: an expert report
The drafters’ analysis of revenue, payment options, and economic questions.
04California Could Lose Up to 217,000 Jobs if Congress Cuts Medicaid
UC Berkeley analysis of how healthcare funding cuts can affect jobs inside and outside healthcare.
05California employer health premiums will cost as much as a new car in 2027
Los Angeles Times
Reporting on California employer health insurance premiums.
https://www.latimes.com/business/story/2026-07-16/california-employer-health-premiums-will-cost-as-much-as-new-car-in-2027
06U.S. Workers Are Paying More for Healthcare, and Next Year Will Be Worse
The Wall Street Journal
Reporting on U.S. employer and worker healthcare costs.
https://www.wsj.com/health/healthcare/u-s-workers-are-paying-more-for-healthcare-and-next-year-will-be-worse-0924d0dd
About this page
This page is published by the Yes on 40 campaign. It makes the case for the measure using the sources linked above. Government agencies, universities, and researchers cited here do not necessarily endorse Prop 40.