California’s Proposition 40 Faces Uncertain Outcome Amid High Stakes

Nearly a week after Election Day, California’s Proposition 40 remains too close to call. The Associated Press reports that “no” votes are leading “yes” votes by approximately six points as of Monday morning. However, over 20% of the state’s ballots are still uncounted, preventing a final decision.

Proposition 40 proposes a one-time 5% wealth tax on California’s more than 200 billionaires. If enacted, it would become the most assertive state effort to tax the wealthy in the U.S., potentially generating around $103 billion to counterbalance federal cuts to healthcare and food assistance.

The measure, championed by a California healthcare workers’ union and supported by Sen. Bernie Sanders, has met strong opposition. Tech industry leaders and other wealthy Californians have spent hundreds of millions on advertising against it, arguing it could drive wealth out of the state and weaken the tax base.

Despite the outstanding ballots that might alter the outcome, Prop 40 currently appears unlikely to pass. Success has been most significant in populous Los Angeles County, where “yes” votes have a 10-point advantage. Yet most votes there have been counted.

Other areas with many uncounted votes, such as San Diego, Sacramento, and the Bay Area, have largely opposed the measure. This complicates prospects for Prop 40’s supporters, with even Democratic strongholds showing high “no” votes appearing influenced by negative campaigns.

Should Prop 40 fail, it would be a rare setback amid a strong Democratic showing in the elections leading to majorities in the House and Senate. This would occur despite widespread voter dissatisfaction with wealthy elites’ political influence.

An attendee wears a “Tax The Rich” hat at a “Yes on 40 for Ballots Over Billionaires” rally in San Francisco on Oct. 3, 2026.

The drive to tax billionaires has split Democratic politics and drawn backlash from some of California’s wealthiest. The conflict has been costly, overshadowing even the gubernatorial election.

If the measure does recover in the count, supporters face another hurdle. Proposition 42, which would negate Prop 40 by preventing new state taxes on personal property, currently leads 52% to 48%. Both measures passing means Prop 40 needs more votes than Prop 42 to become law.

Opponents of the billionaire tax raised over $300 million to defeat it, the most funds ever dedicated against a state ballot measure since at least 1999. This total includes backing for two competing measures.

SEIU-United Healthcare Workers West sponsored Prop 40, yet some typical allies on the left were divided. Critics voiced concerns over funding use primarily for healthcare and a lack of collaboration in the proposal’s design. Notably, the state’s largest teachers’ union and Planned Parenthood affiliate opposed it.

Governor Gavin Newsom, positioning for a potential 2028 presidential candidacy, also opposed Prop 40. He argued that it might drive affluent residents away, reducing future income tax revenue.