California voters have rejected Proposition 40, a first-in-the-nation ballot measure that would have imposed a one-time 5% tax on the net worth of residents worth more than $1 billion, dealing a significant blow to progressive efforts to tax concentrated wealth and handing a political victory to Democratic leaders who opposed the proposal.
The Associated Press projected the measure’s defeat after enough votes had been counted to determine that the “no” campaign had prevailed. The result marks the most significant test yet of a wealth tax in the United States, an idea long championed by progressive politicians as a way to raise revenue from the ultra-rich by taxing their investment wealth rather than only their income.
The campaign against Proposition 40 significantly outspent supporters. Opponents raised roughly 10 times more money than the measure’s backers, according to the AP report. A political action committee called Building a Better California, which opposed the proposal and backed related measures aimed at neutralising its effects, raised more than $333 million. Google co-founder Sergey Brin alone contributed more than $100 million, making him one of the campaign’s most prominent financial backers. Support for Proposition 40 was strongest among younger Californians, according to the AP Voter Poll. Most voters under the age of 30 supported the measure, while roughly seven in ten voters aged 65 and older opposed it. About half of voters with household incomes below $100,000 annually supported the initiative, while nearly six in ten voters earning $100,000 or more opposed it.
The measure also prompted some of Silicon Valley’s most influential figures to reassess their ties to California. Brin and fellow Google co-founder Larry Page were among billionaires who reportedly began distancing themselves from the state ahead of the vote. Income levels also played a role in voting patterns. The divide highlighted differing views among Californians on how aggressively governments should tax extreme wealth to fund public services.
Meta CEO Mark Zuckerberg, meanwhile, had previously indicated he would remain in California and arranged financial mechanisms to help cover any potential tax liability without reducing his ownership stake in the company.