When the world’s leading expert on wealth inequality says that the California billionaire tax could be the turning point to kickstart the national and international movement to tax extreme wealth, you believe him. And when he reaches out to you personally to ask for your support of the measure, you give it.
A few weeks ago, world-renowned economist Gabriel Zucman contacted our Chair, Morris Pearl, about California Proposition 40, or the “One-Time Wealth Tax for State-Funded Healthcare, Education, and Food Assistance Programs Initiative.” We last spoke to you about Prop 40 back in January. As a refresher, if Californians vote to pass the initiative this November, it would establish a one-time, 5% tax on the net worth of billionaires living in California as of January 1, 2026. It would also, quite remarkably, be the first tax on billionaires enacted not only in the United States but around the world.
The main labor union organizing the initiative, Service Employees International Union-United Healthcare Workers West (SEIU-UHW), estimates that roughly 200 California billionaires would be liable to pay the tax and that it will raise about $100 billion in revenue, most of which will be directed to healthcare to make up for federal cuts from President Trump and Republicans’ One Big Beautiful Bill Act.
It’s hard to overstate the significance of Prop 40. The campaign is gearing up to be the most expensive in California history, which isn’t surprising to us given the amount of attention it has received. That said, we decided to devote another Closer Look to it. We’ll start by sharing some key developments that have happened related to the measure over the last six months, and then address some new criticisms it has received. Finally, we’ll highlight what the Patriotic Millionaires are doing to promote the initiative.
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Short on time? Here’s what you need to know
- California Proposition 40 will officially appear on the November 3rd ballot. If passed, it would enact a one-time, 5% tax on the net worth of California billionaires and would be the first tax on billionaires anywhere in the world.
- Over the last six months, opposition to Prop 40 has grown. Governor Newsom led a charge to try and get it removed from the ballot, but failed. Billionaires have also spent $120 million to try and defeat it.
- To counter the California billionaire tax, Governor Newsom proposed a national minimum tax on multimillionaires, although it’s unclear if it’s a wealth tax. If it is, it doesn’t stand a chance against the current Supreme Court.
- A major criticism the initiative has received is that California billionaires would leave on account of the tax and the state would lose precious revenue. But according to a new paper from Gabriel Zucman, Emmanuel Saez, and Jasper Boll, California billionaires pay so little in taxes that, even if they were to leave, it would take years for the loss of their tax payments to exceed what Prop 40 would raise.
- The Patriotic Millionaires are announcing our full organizational endorsement of Prop 40!
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Key developments of Prop 40
The most important update on Prop 40 to share is that it will officially appear on the November 3rd ballot in California. Organizers ended up collecting more than double the required 875,000 signatures needed to make it happen. Some of our own California members even volunteered to collect signatures!
Before a critical June 25th deadline, Governor Gavin Newsom led the charge to try and broker a deal with the initiative’s organizers to withdraw it from the November ballot. He received support from various healthcare groups and a wide array of labor unions, including ones representing teachers, construction workers, and police officers. The president of SEIU-UHW publicly offered to reduce the tax from 5% to 2%, but Newsom rejected it, so now the initiative is officially on the books for the November election.
The biggest opponents of Prop 40 are undoubtedly some California billionaires themselves. As of this writing, they have donated a combined $120 million to thwart the initiative—nearly four times as much as the $31 million that SEIU-UHW has spent. Well-known names include Google cofounder Sergey Brin, former Google CEO Eric Schmidt, Kleiner Perkins chairman John Doerr, Ripple Labs cofounder Chris Larsen, Stripe cofounder Patrick Collison, PayPal cofounder Peter Thiel, and DoorDash CEO Tony Xu. Billionaires have backed three political action committees working to defeat the proposal— Stop the Squeeze, Golden State Promise, and Building a Better California. (Building a Better California is the sponsor of two other ballot initiatives that would undermine Prop 40.)
Opponents of Prop 40 have made quite a fuss about billionaires leaving California on account of the proposed wealth tax. As of now though, we know that just 6 billionaires left the state before the January 1, 2026 cut-off, and a few left afterwards. Outside of moving, some billionaires and their accountants are shifting their wealth in ways to make it exempt from the tax, e.g. making charitable gifts, buying/transferring real estate to their personal balance sheets, holding assets outside of California, and moving portions of their liquid investments into treasuries.
The fresh criticism Prop 40 has received
The California billionaire tax attracted a great deal of controversy and criticism even before it was officially on the ballot. Now that it is, there are no signs that opponents’ criticisms are slowing down.
Pundits continue to panic that Prop 40 will lead all of California’s billionaires to run for the hills of lower-tax states. Back in January, we highlighted a slew of research and evidence that suggests that fears of billionaire tax flight are probably overblown. Here’s one that we didn’t include six months ago: a 2023 study from the Center on Budget and Policy Priorities revealed that, despite having the highest marginal income tax rate in the country, California has the second lowest out-migration rate among households earning over $200,000 over the last decade.
The new rounds of criticism that we’ve seen about Prop 40 stem from this overhyped idea of billionaire tax flight. The day after Prop 40 was confirmed to be on the ballot last month, Governor Newsom announced a proposal for, among other things, a national minimum tax on Americans worth over $100 million. People are calling it a wealth tax, but it’s unclear if that’s what he’s actually done. In any case, in Newsom’s view, such a policy would circumvent a “race to the bottom” among states while advancing tax fairness and preventing the concentration of power.
Even if Newsom were pushing for a national wealth tax, there’s one key player getting in the way of such a proposal: the Supreme Court. The Justices’ 2024 ruling in Moore v. United States made it clear that they would likely rule any future federal taxes on wealth or unrealized capital gains as unconstitutional. (We had a lot to say about this ruling at the time.) Therefore, at present, unless lawmakers manage to enact a constitutional amendment, it’s up to the states to take action to rein in extreme wealth. And what better state is there to get the ball rolling than the one that has the most billionaires, California?
The other big line of attack that we’ve seen involves the concern over state revenue loss if billionaires were to leave California and take their precious tax dollars with them. None other than Gabriel Zucman himself, along with his colleagues Emmanuel Saez and Jasper Boll, put this worry to bed in a new working paper.
According to their findings, California’s billionaires’ fortunes have exploded in recent years, but they nonetheless pay rock-bottom tax rates on their gains. Specifically, between 2019 and 2025, California’s billionaires’ wealth grew an average 15% per year, but they paid a mere 0.26% of their wealth in state income taxes and were responsible for just 2.4% of the Golden State’s income tax revenue. Zucman and his colleagues also ran the numbers and revealed that, even if all of California’s billionaires were to leave, it would take 25 years for the loss of their tax payments—they paid $4.1 billion in state income taxes in 2025—to exceed the $100 billion the state would raise through Prop 40. And if only a quarter of them leave? It would take a century. Bottom line, because billionaires are paying so little in taxes under current California law, these fears over loss of revenue are, by definition, overblown.
What we’re doing for Prop 40
We sent out a survey last week to all of our millionaire members to get a sense of what they thought of the California billionaire tax proposal. We’re all in alignment with our general mission to tax the rich, yet like any member organization, we often have a healthy amount of internal debate when it comes to supporting or opposing specific policies.
The results of our survey were pretty clear: our members, including those from California and many who are not, give Prop 40 a big thumbs up. They gave various reasons, but they centered around tax fairness, raising critical revenues, and reining in democracy-destabilizing levels of wealth inequality.
It’s far past time for lawmakers to tax millionaires like us more. That includes “thousand millionaires” (AKA billionaires) too.
Now that we’ve gotten our ducks in a row internally, we can announce that we are offering our full organizational endorsement of California’s billionaire tax ballot initiative.
Over the last few months, our members have also spoken to the media in support of the California billionaire tax. Our members have given interviews to The Telegraph, The Center Square, Fox News, Barron’s, the Rick Smith radio show, and Deseret News. One of our California-based members, Maureen Kennedy, also wrote an opinion piece about the billionaire tax for The Hill back in February.
We’ll continue to monitor the situation surrounding Prop 40, and what we can expect to happen next. And if there’s news you need to know about it, you can count on us to share it.