Overview
- Proposition 40 would impose a one-time 5% tax on Californians with a net worth above $1 billion, direct 90% of proceeds to health care and 10% to food assistance or education, allow payment plans over five years, and exclude some assets such as most real estate and retirement accounts.
- Propositions 41 and 42 are written to limit or undo the wealth levy by requiring audits and counting new special-tax revenue toward the state spending limit and by banning new taxes on personal assets and retroactive levies, and California law says the competing measure with the most yes votes would prevail.
- Prominent Democrats are split on Prop 40, with Rep. Ro Khanna and Sen. Bernie Sanders backing it, Tom Steyer calling the measure “problematic” but urging support, and Gov. Gavin Newsom opposing it.
- Fiscal estimates say the measure could raise tens of billions of dollars over a few years while possibly reducing annual income-tax revenue from the very wealthy by less than $1 billion, but analysts warn valuation, enforcement and relocation risks could lower actual collections.
- Opponents have poured heavy money into advertising and polls show slipping or narrow support for Prop 40, creating voter uncertainty that will determine near-term Medi-Cal funding and could set a model for other states considering taxes on extreme wealth.