California’s Billionaire Tax Is About to Hit 250 People. Here’s Why the Whole World Is Watching.

California’s Billionaire Tax: A Bill for 250 People, a Vote for 39 Million

On Market Street in San Francisco, two advertisements sit side by side on a bus shelter. The one on the left says Proposition 40 will cost teachers and firefighters their jobs. The one on the right says the combined wealth of California’s 250 billionaires equals the total wealth of the bottom half of households. People waiting for the bus look down at their phones. No one reads the second line.

In November, California voters will decide one thing: whether residents with a net worth above $1 billion should pay a one-time tax equal to 5% of their assets.

The ballot initiative is specific. The tax applies to billionaires who are California residents as of January 1, 2026. The tax base excludes real estate, pensions, and retirement accounts. Payment can be spread over five years, but installments carry an additional charge. Of the revenue raised, 90% must go to public health care. The rest is divided among education, food assistance, and administrative costs. The union pushing the measure, the Service Employees International Union-United Healthcare Workers West, has run the numbers. It estimates the tax could raise $100 billion, money intended to offset federal cuts to health care spending.

On September 19, six Nobel Prize-winning economists signed a letter endorsing the proposal. The signatories were Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman, and Joseph Stiglitz. The letter included a set of figures: California has roughly 250 billionaires, with a combined fortune of $2.3 trillion. Between 2019 and 2025, their wealth grew by $1.4 trillion. During that same period, the state income taxes they paid amounted to only 1.6% of that gain. “California is the right place to take this historic step,” the letter said. It ended with a line that supporters have reprinted on flyers: “If the state that houses some of the country’s most powerful billionaires votes to tax their wealth, it will kickstart a movement to tax ultra-high-net-worth individuals in other states—and eventually at the federal level and in other countries.”

Supporters have made that sentence the center of their campaign. They also point to venture capital data. Since the start of 2026, California has attracted 80% of all new venture capital funding in the United States, up from about 50% before 2025. Nvidia CEO Jensen Huang, when asked about the tax, said he is “perfectly fine” with it. In the union’s office, staff have taped a $100 billion budget table to the wall. Next to it is a news clipping about federal health care cuts.

Opponents are not standing still. Governor Gavin Newsom opposes the measure. Google cofounder Sergey Brin has contributed more than $100 million to the opposition campaign. Some unions have also come out against it, arguing that state government has other spending priorities. Opponents’ advertisements say the tax will force startup founders to sell large pieces of their companies and drive capital out of California. On Reddit, one commenter wrote: “What they fear is the domino effect. Give an inch, and ‘tax the rich’ could open the door to real tax reform.” Another commenter wrote: “Unless it’s a national tax, billionaires will just move. They already have houses in other states.”

A recent poll from the Public Policy Institute of California found that 52% of likely voters support Proposition 40, while 46% oppose it. The margin is narrow. More complicated still, two competing ballot measures could cancel it out. Proposition 41 would make any new taxes subject to the state’s existing spending limit. It currently leads 51% to 44%. Proposition 42 would prohibit taxes on financial assets and personal property other than real estate. It leads 54% to 43%. If either of those measures receives more yes votes than Proposition 40, then even if Proposition 40 passes, it could be nullified. Mark Baldassare, the poll’s director, told KQED: “Supporters of Proposition 40, the so-called billionaire tax initiative, have a lot of work to do.”

Legal challenges are almost certain. The disputed questions include whether a state can tax unrealized assets, who decides how much a private company is worth, and whether billionaires can avoid the tax by changing their residency. On Reddit, one commenter predicted: “Some state will become the Delaware of billionaires.” Another pushed back: “Every time taxes go up, they say they’ll move. They usually don’t, because they still want to live in these places.”

The Nobel laureates’ letter ties the state ballot measure to a national and international argument. “As Californians head to the polls, their vote may well come to be seen as a turning point in the battle between democracy and oligarchy,” the letter said. Newsom, while opposing the state measure, supports a federal billionaire tax. He has proposed a modern “Buffett Rule.” Whatever happens in California, the argument over wealth taxation has already crossed state lines.

Supporters also argue that the tax will not doom Silicon Valley. California continues to dominate venture capital. The state’s ultra-rich would still be among the wealthiest people in the world even after paying the tax, supporters say. The revenue could fund health care, education, and food assistance at a time when federal support is shrinking. Opponents counter that a one-time tax will not stay one-time. They warn that if Proposition 40 passes, future legislatures will come back for more. They also say that illiquid assets, including private company shares, startup equity, and intellectual property, cannot be easily converted into cash without damaging the companies that create jobs.

The measure has split California’s political and business leaders. Congressman Ro Khanna supports Proposition 40, but he has conceded that he does not want illiquid stakes or voting shares to be taxed. Some unions oppose it, saying other areas of state spending should be priorities too. Nvidia’s Huang is fine with it. Brin has spent more than $100 million against it. The campaign now turns on one question: should the state that creates extreme wealth also tax it to pay for social costs?

On Election Day in November, county workers will fold “I Voted” stickers one by one. Counting machines will turn in the background. If Proposition 41 or Proposition 42 receives more votes, Proposition 40 could become a piece of paper. If Proposition 40 passes and survives court, California will become the first U.S. state to directly tax billionaire wealth. If it fails, the Nobel laureates’ letter goes into an archive. Another ballot measure can revive it.

The bus on Market Street arrives. The people waiting get on. The advertisements stay where they are. The one on the left says teachers and firefighters. The one on the right says 250 people. When the polls open, some of California’s 39 million residents will remember those two signs.