California’s fiercely contested billionaire tax appeared headed for defeat Tuesday night after a bruising campaign divided Democrats, prompted Silicon Valley billionaires to consider leaving the state and fueled a $330 million-plus effort to defeat the proposal.
Proposition 40, which would impose a one-time 5% tax on billionaires’ wealth, trailed 56% to 44% with about half the ballots counted shortly after 9 p.m.
The measure was one of the most contentious of the 14 propositions on California’s ballot, setting powerful labor unions and progressive Democrats against some of the world’s wealthiest technology entrepreneurs.
Google co-founder Sergey Brin became the most prominent voice in the billionaire opposition, contributing more than $100 million to efforts to defeat the tax.
The Soviet-born technology mogul also issued a rare public statement invoking his family’s escape from communism while criticizing the proposal.
“I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don’t want California to end up in the same place,” Brin said.
Brin helped fund Building a Better California, the political committee supporting two competing ballot measures intended to nullify the billionaire tax even if voters approved it.
Proposition 41 would impose stricter rules on some new state taxes and require audits of the programs those taxes finance. Proposition 42 would bar new state taxes on personal property, including financial assets, as well as certain retroactive taxes.
Either measure could invalidate Proposition 40 if it received more votes than the billionaire tax.
Shortly after 9 p.m., Proposition 41 was narrowly behind, while Proposition 42 led by nine percentage points and had received more “yes” votes than the billionaire tax.
The fight over the tax also laid bare significant divisions within California’s Democratic establishment.
Gov. Gavin Newsom and Democratic gubernatorial candidate Xavier Becerra opposed the measure, warning that it could push wealthy entrepreneurs, their companies and jobs out of California, causing severe damage to the state’s economy.
California’s Democratic Party, however, defied its leaders and endorsed the proposal at its August convention in San Diego.
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Vermont Sen. Bernie Sanders also backed the tax and traveled to California to campaign on its behalf.
Supporters argued that the measure could generate $100 billion, with 90% dedicated to health care and the remainder directed to education and food assistance.
California’s nonpartisan Legislative Analyst’s Office, however, estimated that the tax would raise tens of billions of dollars over several years and did not endorse the campaign’s $100 billion projection.
The controversial measure was led by Dave Regan, president of SEIU United Healthcare Workers West. Regan has faced allegations that he pressured fellow labor leaders to support the proposal and threatened and intimidated female union officials.
Regan has also been accused of physically assaulting a former SEIU executive in 2009.
The union spent more than $20 million to help place the measure on the ballot, while the campaign later raised about $33 million to promote its passage.
Standing alongside labor allies and Democratic Rep. Ro Khanna on Tuesday, Regan blamed billionaires for the opposition campaign and argued that the tax was necessary to offset gaps created by federal health care funding cuts.
“Whatever happens tonight, the reality is … somehow lost in the flood of advertising over the last few weeks, is the reality that since the One Big Beautiful Bill passed, 1.8 million Californians have lost their health insurance,” Regan said.
As the tax fight intensified, several Silicon Valley billionaires had already begun taking steps to distance themselves from California.
They included Minecraft creator Markus “Notch” Persson, Palantir co-founder Peter Thiel and former Uber CEO Travis Kalanick.
Meta founder Mark Zuckerberg was also reported to have considered establishing residency outside California over concerns about the proposed tax.
The extraordinary campaign made California a national proving ground for a wealth tax long promoted by progressives across the country. If successful, the measure could have encouraged similar efforts elsewhere.
