The fate of a controversial ballot measure to impose a new tax on California billionaires, proposed as a lifeline for the needy and castigated as a threat to the state’s fragile economy, appeared headed for defeat in early election results Tuesday night.
California voters also rejected another hotly contested measure, Proposition 39, which would have required voters to show identification when they cast ballots and elections officials to verify that all registered voters were U.S. citizens.
The billionaire tax, Proposition 40, would impose a one-time 5% tax on the assets of billionaires to raise an estimated $100 billion to assist millions of Californians destined to lose healthcare coverage under federal funding cuts. Two separate ballot measures, Propositions 41 and 42, were crafted to nullify the wealth tax and remained too close to call Tuesday evening.
While supporters of the billionaire tax did not concede Tuesday evening, they acknowledged facing tough odds in the race because of the avalanche of spending against them and warned that people will die if the measure fails.
“In the event that we don’t succeed with Prop. 40 tonight, if Sacramento fails to deliver a real solution to the healthcare crisis instigated by the [federal government], one that actually makes billionaires pay their fair share, then California’s healthcare workers intend to be back on the ballot in 2028 to correct the damage, and to overcome all of the lies and deception, and just completely outrageous campaigning that we’ve seen,” said Dave Regan, president of SEIU-United Healthcare Workers West, which crafted the proposal.
Voters rejected the Republican-led Proposition 39 at a time of growing distrust in the integrity of the electoral process nationwide, a wariness intensified by President Trump’s baseless claims that the 2020 election was stolen from him and false assertions that droves of undocumented immigrants, notably in California, are swaying elections.
On Monday, the Supreme Court rejected an emergency appeal by Trump’s attorneys to set aside 20,000 ballots in the state that the White House argued could be cast by people who are not citizens.
The proposals were among the 14 state ballot measures that California’s 23.3 million registered voters were asked to decide Tuesday in addition to congressional, statewide and local elections.
The billionaire tax was proposed in response to legislation signed by Trump last year that could result in millions of Californians losing Medi-Cal coverage, rural hospitals shuttering and other healthcare services being slashed unless a new funding source is found. The proposal would retroactively apply to billionaires who lived in California as of Jan. 1, prompting some to preemptively move out of the state. Ninety percent of the revenue would fund healthcare programs, and the remaining funds would be spent on education programs and food assistance.
Proposition 40 divided Democratic leaders because of concerns about its impact on the state’s volatile budget that is highly dependent on the wealthy. Gov. Gavin Newsom opposed the measure, while the state Democratic party endorsed it.
The effort supporting and opposing the tax and two ballot measures designed to nullify it came close to breaking a state campaign finance record. About $425 million had been donated to the three commingled ballot measures as of Tuesday.
The vast majority of that money was provided by California billionaires, including some of the state’s most powerful tech barons, opposing the wealth tax. The campaign was centered on three interwoven ballot initiatives: Proposition 40 and Propositions 41 and 42, both of which would undercut Proposition 40 through a series of strategic changes to state tax laws and new spending restrictions.
Neither explicitly stated that it would nullify the billionaire tax if Proposition 40 passed and either of the counter measures received more votes.
Proposition 41, which trailed slightly Tuesday evening, is framed as an effort to cut wasteful government spending and require audits of new special taxes. But it also would bar new taxes that are exempt from state spending limits. Proposition 42, which was slightly ahead, is presented as protection from state lawmakers taxing everyday Californians’ retirement funds, personal savings and home equity.
In polling leading up to election day, voters appeared to differentiate between the billionaire tax proposal and Proposition 3, which was approved by voters on Tuesday. . It would make permanent a temporary tax increase on wealthy Californians that largely funds education. The tax adds 1% to 3% to the state income tax of single filers who earn more than $360,000, joint filers who make more than $721,000 and heads of household who earn more than $490,000. Voters passed the tax in 2012 and extended it in 2016, but it is set to expire in 2031.
Voters cast ballots on several other proposals about local taxes, public financing of political campaigns, a landmark environmental law, housing, the state’s recall process, state lawmakers’ ability to redirect taxpayer money to the state’s “rainy day” fund, immunology and immunotherapy funding, and restrictions on how community healthcare clinics spend money:
Several ballot measures were decided Tuesday evening:
- Proposition 1, which proposed a $11.25-billion bond to boost the construction of affordable housing, was approved by voters.
- Proposition 2, which would gave state lawmakers more flexibility over state spending by exempting certain tax revenue from a state spending limit, allowing them to place it into a “rainy day” fund, was approved by voters.
- Proposition 37, which would create a down-payment assistance program to help middle-class Californians buy a home, was approved by voters.
- Proposition 44, which would require certain health centers to spend 90% of their revenue on patient care rather than overhead and executive compensation, failed.
Among those that remained too close to call:
- Proposition 4, which would allow state and local candidates to receive public campaign financing if they demonstrated broad support and agreed to expenditure limits.
- Proposition 5, a constitutional amendment that would alter the state’s recall process by limiting it to the question of whether to remove an elected official from office, and no longer including the cadre of candidates hoping to replace the politician.
- Proposition 38, which would create an $8.4-billion bond to support the immunology and immunotherapy fields.
- Proposition 43, which would bar local governments from imposing special taxes unless two-third of voters support the effort. Current law requires a simple majority vote.
- Proposition 45, which would amend the California Environmental Quality Act to speed up certain housing, water, energy, transportation and other projects deemed essential.
