California Ballot: Billionaire Tax Fails, New Constitutional Ban Takes Effect

Voters in California have rejected a proposal to tax the personal wealth of billionaires, ending a high-stakes campaign that promised to raise funds for medical services. As of Wednesday, tallies showed Proposition 40 trailing by approximately five percentage points. The measure, which sought a one-time 5% tax on the assets of the state’s wealthiest residents, appears to have failed despite earlier polling that suggested strong support.

The defeat of Proposition 40 marks a major outcome in Tuesday’s election. The ballot initiative was filed by the Service Employees International Union-United Healthcare Workers West. The union argued the tax could generate up to $100 billion to support medical services facing federal and state budget cuts. However, the campaign faced a well-funded opposition effort. Billionaires targeted by the tax spent several hundred million dollars on media ads to defeat the measure.

Internal divisions also weighed on the proposal. The Democratic Party and the labor union community were split over the tax. Many labor leaders opposed the measure because the revenue would have flowed primarily to healthcare, leaving education and other services without a direct share. Dave Regan, the leader of SEIU-UHW, stated the union plans to try again if the Legislature does not provide a real solution to healthcare funding. Regan called this a concrete plan rather than a hypothetical scenario.

Regan’s second ballot measure, Proposition 44, also failed. That proposal would have required clinics serving low-income patients to direct 90% of their annual revenue directly to patient care. The double loss represents a setback for the union’s legislative agenda. Meanwhile, voters appear to have approved Proposition 42, a countermeasure placed on the ballot by opponents of the wealth tax.

Proposition 42 places a prohibition on taxing personal wealth into the California state constitution. This outcome effectively codifies the stance of anti-tax advocates who have been active since the passage of Proposition 13 in 1978. That earlier measure limited property taxes and made enacting new taxes more difficult. The approval of Proposition 42 partially offsets the rejection of Proposition 43, which sought to make local government taxes harder to pass.

The election results also show voters making the temporary income tax hike for high earners permanent. Proposition 3, first approved in 2012, passed Tuesday’s ballot. This creates a mixed tax picture for the state. The combination of results signals a continued conflict between pro-tax and anti-tax forces. The rejection of the billionaire tax, combined with the constitutional ban, gives the anti-tax faction a distinct advantage in shaping future fiscal policy.