The numbers come first. The San Francisco Democratic Party voted 17-4 to oppose Proposition 40, California's proposed billionaire wealth tax, with five members abstaining, five absent, and one declining to endorse either side. Former House Speaker Nancy Pelosi chose not to endorse the measure. The break comes just weeks after the statewide California Democratic Party endorsed Prop 40 in August, clearing a 60% threshold in a contentious vote.
Proposition 40 would impose a one-time 5% tax on the net worth of Californians who held more than $1 billion in assets as of January 1, 2026. About 200 billionaires, holding a combined $2 trillion, would be subject to the tax. Payments could be spread over five years, though doing so would cost more. Ninety percent of resulting revenue would go to healthcare services, and the state's Legislative Analyst's Office estimates the measure could generate tens of billions of dollars in temporary revenue over several years — while cautioning that 'it is hard to know what actions billionaires would take to reduce the amount of tax they pay.'
That uncertainty is already showing up in the numbers: six billionaires have ended their California residency ahead of the January 1 deadline. The LAO itself projects that behavioral responses — departures or income restructuring — could shrink the state's ongoing income-tax revenue by close to $1 billion a year, on top of tens of millions in new administrative costs to assess and collect the tax.
Mark Cuban, writing on X, argued the measure misreads how startup wealth actually works: 'A unique feature of these 10b startups is that even if they raise a billion, little, if any of that money goes to the founders... They are the definition of cash poor, stock rich.'
Support for Prop 40 comes from SEIU-United Healthcare Workers West, which placed it on the ballot, along with the California Labor Federation, the Teamsters, Representative Ro Khanna, and Senator Bernie Sanders. A UC Berkeley Institute of Governmental Studies poll found 48% of likely voters back the tax versus 41% opposed.
Billionaire-funded opposition has organized around two counter-measures. Proposition 41 would mandate audits of programs funded by new special taxes, and Proposition 42 would bar retroactive taxation outright — directly nullifying Prop 40. Both are backed by the group Building a Better California, with Ripple co-founder Chris Larsen contributing an extra $10 million and Google co-founder Sergey Brin and former Google CEO Eric Schmidt together giving more than $118 million. Khanna's proposal that founders pledge shares to the state in exchange for a nonrecourse government loan to cover the tax drew swift pushback from Cuban and Anduril founder Palmer Luckey.
The market has already voted with its feet. Six billionaires didn't wait for November — they left before the tax could touch them, and San Francisco's own Democratic base just delivered the clearest signal yet that even inside the party, confiscatory wealth taxes are recognized as a threat to the tax base they claim to protect.
Capital rewards clear rules, and Prop 40 offers the opposite: a one-time raid on paper wealth that could permanently shrink the ongoing revenue California depends on. When the people creating jobs and filing income taxes have every incentive to relocate, the state's own analysts are conceding the tax could cost more in flight than it raises in revenue.
