Photo: © Steven Pavlov / CC BY-SA 3.0
California’s proposed one-time 5% tax on billionaires appeared headed for defeat Wednesday afternoon, leaving a major funding proposal for healthcare and other state programs in doubt as vote counting continued.
Fox News reported that Secretary of State returns showed Proposition 40 on a path to rejection. Gov. Gavin Newsom opposed the measure, arguing that a state-level wealth tax would hurt California’s competitive position. The report did not describe a final certified result.
For affected business owners and taxpayers, the question is whether California will impose a new levy on accumulated wealth rather than income. For healthcare providers and patients, the vote also bears on a proposed source of state funding, not an immediate change in coverage already in force.
A tax on wealth, with healthcare funding at stake
The measure proposed a one-time 5% tax on assets of roughly 250 Californians whose combined wealth was estimated at $2 trillion, according to the account. Covered assets would include businesses, securities, art, collectibles and intellectual property, with exclusions for real estate and certain pensions and retirement accounts.
The proposal was written to apply to billionaires who were California residents on January 1, 2026. Ninety percent of revenue would go to healthcare, with the remainder allocated to education, food assistance and tax administration.
The Democratic Socialists of America supported the measure. Its California materials argued that the money was needed to help offset a projected shortfall in federal funding for Medi-Cal, the state’s health-insurance program for low-income residents and others who qualify.
Newsom draws a state-versus-national distinction
Newsom told Fox News Digital before the election that he considered the initiative badly written, dependent on one-time money and harmful at the state level. He said people had already left California because of the proposal. That was his argument against the measure, not a quantified finding in the report.
He also said a national wealth-tax proposal would be a different discussion, drawing a distinction between a federal policy and a tax adopted by an individual state.
Newsom instead backed Proposition 42, a countermeasure designed to prohibit new state taxes on personal property and restrict certain retroactive taxes. Fox reported that it appeared on track to pass, also while counting was still underway.
The debate turns on both revenue and mobility: supporters want wealth to finance public services, while opponents argue that taxing business ownership and other assets can push investment or residents elsewhere. Wednesday’s incomplete returns pointed against Proposition 40, but were not a final certified outcome.
JBizNews Desk | Sacramento
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