More than $333 million poured into defeating a California ballot measure targeting the state’s wealthiest residents, and on Tuesday night, that spending paid off decisively.
Decision Desk HQ projected that California voters rejected Proposition 40, with 54 percent voting against the measure and 46 percent in favor, based on 76 percent of ballots counted as of 8:51 p.m. Eastern.
The outcome hands a significant political victory to Silicon Valley executives and tech billionaires who mobilized aggressively to kill the proposal before it could reach the books.
Had it passed, Proposition 40 would have introduced a one-time 5 percent levy on the wealth of the state’s billionaires, a structure with no precedent anywhere in the country.
Revenue generated by the tax was designed to flow primarily into state healthcare programs, with the remaining funds directed toward food assistance and education initiatives.
Google co-founder Sergey Brin emerged as the most prominent and financially committed opponent, publicly relocating out of California and funneling $102 million into Building a Better California, a political committee he founded specifically to fight the measure.
The California Tax Foundation, whose research was cited by the Chamber, estimated that billionaire departures and their economic ripple effects would ultimately reduce state tax revenue by between $3.53 billion and $4.49 billion annually.
That argument found traction with voters even though the state’s own Legislative Analyst’s Office concluded that taxing roughly 200 billionaires could raise tens of billions of dollars for public programs.
The defeat exposed a notable fracture inside the California Democratic Party, with the state party organization, the AFL-CIO, and the Teamsters all backing Proposition 40 while Gov. Gavin Newsom publicly opposed it.
Newsom, who is term-limited, said he supports a federal-level billionaire tax in principle but took direct aim at Proposition 40’s funding formula, arguing it directed “almost all of the revenue” to healthcare at the expense of broader priorities.
Pre-election surveys had suggested majority opposition to the plan, though the final polling margins were narrow enough to keep supporters hopeful heading into Tuesday.
Voters also weighed in on a companion measure, Proposition 42, which would prohibit California from taxing financial assets, private businesses, pensions, and other forms of accumulated wealth going forward.
The lopsided spending advantage enjoyed by opponents underscored how quickly the state’s billionaire class can mobilize when legislation threatens their financial interests directly.
For Newsom and the business community, the result reinforces California’s complicated relationship with progressive taxation, where ambition at the ballot box can run headlong into capital flight concerns and well-funded resistance.
