California doesn’t need any more taxes — even on billionaires.
This November, voters will be asked to consider Proposition 40, an allegedly one-time tax of 5% on billionaire wealth. I say “allegedly” because the same ballot asks voters to extend an unrelated tax that has been “temporary” since 2012.
Prop. 40 is bad and unnecessary for lots of reasons. It’s so bad, in fact, that it’s opposed by one of the largest and most diverse coalitions in recent memory — uniting everyone from me, the California Business Roundtable and the Howard Jarvis Taxpayers Association to Gov. Gavin Newsom, the California Medical Association and the California Teachers Association.
We don’t dislike it for all the same reasons. But this isn’t a purity test.
Voters will also decide two countermeasures designed to stop it: Propositions 41 and 42.
Prop. 42 is the more interesting of the two, so let’s start there. It bans new state taxes on the mere ownership of personal property, like retirement accounts, investment accounts, business interests and intellectual property. In other words, the next frontier of taxation in California. It also bans new retroactive taxes, so the state can’t reach back in time to tax things that already happened or that you already own.
Be still my heart.
“Politicians and special interests should be prohibited from taxing the mere ownership or control of personal property such as retirement holdings, individually-owned assets, and other forms of personal savings that Californians work hard to save,” Prop. 42’s authors write, noting that the state already taxes income, capital gains, real property, personal property, corporations, sales and plenty else.
If you’re wondering what kind of tax Prop. 42 is seeking to prohibit, the billionaire tax is a good guess. Note what the Prop. 40 billionaire tax actually does: it doesn’t just tax wealth, it taxes it retroactively, assessing billionaires based on a snapshot of their residency and net worth as of Jan. 1, 2026 — months before voters ever weigh in. That’s the “you can’t leave” clause, and it’s precisely what Prop. 42 would forbid.
Beyond basic fairness — and billionaires already prop up the state budget by paying a wildly disproportionate share of income taxes — the core problem with a wealth tax is that wealth exists on paper. Stock prices move. A billionaire’s holdings could shed 10% of their value the day after assessment, with no whiff of a refund. And either way, paying the bill means selling stock, or something else, to raise the cash.
As for Prop. 41: it requires audits of programs funded by new special taxes — including an audit before the election for special taxes proposed by initiative — and it prohibits new taxes from being exempted from the state’s existing voter-approved spending limit, the Gann limit. Translation: show voters where the money is going before you raise a new tax, and stop gaming the Gann limit, which Sacramento does often.
I feel seen. Both measures are sensible safeguards against greedy lawmakers and powerful special interests like SEIU United Healthcare Workers West, the union pushing the billionaire tax.
Prop 40 would impose its one-time 5% tax on the few hundred billionaires in California. Despite the campaign’s talk of schools and food assistance, fully 90% of the money goes to health care — the education and food assistance account splits the remaining 10%, which also has to cover the cost of administering the tax itself. In other words, SEIU-UHW, a health care workers union, qualified a measure that steers nine of every ten dollars to the industry its members work in. It’s self-dealing dressed up as compassion, and it erodes private property rights even further than they’ve already been eroded.
Europe already ran this experiment. Most of the countries that adopted wealth taxes later repealed them, as the levies collapsed under the weight of their own expectations — with capital flight chief among the causes. Billionaires just move. California is getting a preview: a handful of billionaires have already cut ties with the state, taking billions in potential revenue with them.
Prop. 40 is ballot-box budgeting at its worst, using one-time revenue to fund ongoing spending. Even the Legislative Analyst’s Office concedes the trade: a temporary windfall now in exchange for a likely permanent drop in income tax revenue of hundreds of millions of dollars or more every year.
One last thing, because it matters: under the California Constitution, when ballot measures conflict, the one with the most “yes” votes prevails. It’s not enough for Propositions 41 and 42 to pass, they need to get more votes than Proposition 40.
Voters should act accordingly — and emphatically.
Matt Fleming is a columnist for the Southern California News Group.