RCJ votes NO. We are all for taxing the wealthy, and taxing corporations, as a means of funding critical social services, but this should be a federal, not a state initiative.
Proposition 40 would impose a one-time tax of up to 5 percent on the covered wealth of Californians whose net worth exceeded $1 billion on January 1, 2026. Certain assets, including real estate and some retirement accounts, would generally be excluded. Ninety percent of the revenue would be directed to health care, with the remainder going to education, food assistance, and administration of the tax.
The Pro Argument
Supporters argue that California’s wealthiest residents can afford a substantial one-time contribution and that the money could help address pressing health-care needs. The measure comes amid concerns about reductions in federal health-care funding and the cost of maintaining access to Medi-Cal and other public health services.
Proponents also argue that the tax would raise tens of billions of dollars, providing resources that could be directed toward health care without raising taxes on middle- and lower-income Californians. The measure requires 90 percent of its proceeds to be spent on health-care services.
The Con Argument
Opponents argue that a large one-time tax on accumulated wealth could encourage some billionaires to leave California or otherwise change their financial arrangements, reducing the state’s future income-tax revenue. The Legislative Analyst estimates that such responses could eventually reduce state income-tax revenue by less than $1 billion annually, although the precise effect is uncertain.
Critics also question whether a temporary windfall is an appropriate way to finance ongoing health-care obligations. They point to the difficulty of valuing assets such as privately held businesses, stocks, art and intellectual property and argue that administering the tax could be complicated and costly. The state estimates administrative costs could reach tens of millions of dollars annually for several years.
In Brief
The central debate is between raising a large, one-time sum from California’s wealthiest residents for health care and concerns about economic effects, taxpayer relocation, administrative complexity and the sustainability of using temporary revenue for continuing public programs. The state estimates the measure would generate tens of billions of dollars over several years, but the exact amount is difficult to predict because wealth values and taxpayer behavior can change.
One additional wrinkle is that Proposition 40 could interact with Propositions 41 and 42 on the same ballot; the Legislative Analyst says a court could potentially prevent Proposition 40 from taking effect if either competing measure receives more “yes” votes.
Supporters
The official voter guide identifies two principal supporters:
- U.S. Sen. Bernie Sanders
- SEIU United Healthcare Workers West, which sponsored the initiative.
Other supporters include:
- California Nurses Association
- Doctors with the Committee of Interns and Residents
- California LULAC
- Clergy and Laity United for Economic Justice (CLUE)
- Rep. Ro Khanna
The California Democratic Party also supports Prop. 40. The campaign has raised about $31.4 million, almost entirely through the SEIU-sponsored committee, according to the Secretary of State’s campaign-finance records through August 2.
Supporters argue that the tax would raise roughly $100 billion, primarily for health care, after federal reductions in health-care funding. They characterize it as a one-time tax on a few hundred extremely wealthy Californians rather than a tax on ordinary households.
Opponents
The official voter guide identifies:
- California Primary Care Association
- California School Boards Association
- California Taxpayers Association
But the opposition coalition is considerably broader. It includes:
- Gov. Gavin Newsom
- California Teachers Association
- Planned Parenthood Affiliates of California
- California Children’s Hospital Association
- California Professional Firefighters
- State Building and Construction Trades Council of California
- California Chamber of Commerce
- California Hispanic Chambers of Commerce
- California Medical Association
- California Conference of Carpenters
The California Business Roundtable is also financing opposition. Billionaire Sergey Brin and other wealthy individuals have been major financial backers of the campaign against the measure.
The opposition argues that the tax could encourage wealthy residents and businesses to leave California, reducing the state’s income-tax base and potentially producing substantial long-term revenue losses. It also objects to the measure’s constitutional structure and to provisions allowing the Legislature to amend it under certain circumstances.
An unusual political split
Prop. 40 does not divide neatly along conventional Democratic-versus-Republican lines.