# Prop 40: One-time 5% tax on billionaires (mostly for health care)

URL: https://www.californiapeople.org/props/prop-40

- number: 40
- title: One-time 5% tax on billionaires (mostly for health care)
- type: Initiative constitutional amendment and statute
- sponsor: SEIU-United Healthcare Workers West (SEIU-UHW)

**Our read: Lean no.** A one-time 5% tax on billionaires for health care. Revenue is “very hard to predict,” and the sponsor union offered to drop it for a deal.

## Key findings
- The sponsor, SEIU-UHW, has filed **dozens of initiatives since 2012, and few if any have passed**: its dialysis Props 8, 23 and 29 all lost, with 40%, 37% and 32%. Several others were dropped after deals with hospitals. [^1][^2]
- In June 2026 the union **offered to drop this measure for a 2% legislative deal**. No deal happened. [^3]
- Wealth taxes elsewhere: **12 OECD countries had one in 1990 and 4 in 2017; as of 2025, 3 do** (Spain, Norway, Switzerland, per the Tax Foundation), raising 0.6–4.3% of their tax revenue. The OECD says they "often failed to achieve their redistributive objectives." [^4]
- Revenue is "tens of billions" but **"very hard to predict"** (LAO). The sponsor says ~$100B. Six billionaires reportedly left before the Jan 1 cutoff, taking an estimated **$26.8B** of the projected base. [^5][^6][^1]
- The 90% for health care is **one-time** money, not an ongoing funding source [^5]. Health care spending could indirectly benefit members of the sponsor's union through more secure jobs and pay. [^7]

## Track record
**The sponsor's ballot history**
| Year | Measure | Target | Result | Union spent |
|---|---|---|---|---|
| 2012, 2014 | Hospital initiatives | Hospital pricing and executive pay | Withdrawn after deals with hospitals | n/a |
| 2018 | Prop 8 | Dialysis revenue caps | Lost, 40% yes | $19.3M (vs. $111M+ from dialysis firms) |
| 2020 | Prop 23 | Dialysis staffing | Lost, 37% | $8.9M |
| 2022 | Prop 29 | Dialysis staffing | Lost, 32% | $8.0M |
| 2026 | Prop 40 | Billionaire wealth | ? | $32.9M raised by its Yes committee through Oct 22 [^8] |
| 2026 | Prop 44 | Community clinics | ? | $16.9M |
Most commentators read the dialysis measures as pressure to unionize clinics. [^1][^2]

**Taxes on the very rich in other states**
| Tax | Projected | Actual |
|---|---|---|
| Washington capital-gains tax, year 1 (2023) | — | $786M from ~3,000 payments [^9] |
| Washington, year 2 (2024) | $1.5B counted in the budget | $433M as of May 15, 2024 (partial). Expected to "fluctuate year to year" with the economy [^9] |

## What it does
- One-time tax equal to 5% of net worth for people worth over $1B who lived in California on Jan 1, 2026. It can be spread over 5 years, at extra cost. Real estate, pensions and retirement accounts generally are excluded. [^5]
- 90% to public health care, 10% to education, food aid and administration. Exempt from the state spending limit and the Prop 98 school formula. [^5]
- Voided if Prop 41 or 42 gets more yes votes. [^10]

## Money and conflicts
- **Yes $33.4M** (mostly SEIU-UHW). **No $130.3M**, led by Building a Better California (Sergey Brin $102M, Eric Schmidt $40.2M, John Doerr $40M). Peter Thiel gave $3M. [^8][^11][^6]
- **The money fight is billionaires vs. a union.** Brin, one of the billionaires the tax targets, reportedly left the state before the cutoff. [^6]
- Labor is split. CTA, firefighters and the Building Trades oppose it. Teamsters, AFSCME and the Labor Federation support it. [^10]

## Fact-check
- The opponents' ads say it's a "Trojan horse" that lets politicians extend the tax to everyone. CalMatters rated that **only partially true**. Legislative changes must be "consistent with and further the purposes" of the act; an expert said lawmakers "probably couldn't lower the threshold," and expanding the tax would likely need another vote. [^12]

## Does it solve a lasting problem?
- No. It is one-time money, not ongoing funding, its revenue is "very hard to predict," and it could shrink the income-tax base if billionaires leave (LAO: probably less than $1B a year lost). Health groups say they "weren't consulted in designing the measure"; Planned Parenthood and the CMA oppose it. [^5][^10]

## If you vote yes: accountability
**Bottom line:** The tax is collected by the Franchise Tax Board, but **where the health money goes is left to the Legislature**, up to $22.5B a year. There's **no State Auditor review and no independent oversight board**. [^13]

### Who decides, and who answers for it
- **The Franchise Tax Board** assesses and audits the tax. [^13] Its board is the State Controller, the chair of the Board of Equalization, and the Director of Finance. [^14] **The Controller and Board of Equalization races are both on this ballot.**
- **The Legislature** decides each year how to spend the health money, within broad uses: restoring federal cuts, Medi-Cal and other coverage, safety-net providers, and preventing closures. [^13]
- **The Department of Finance** must report to the Legislature on the fund, and certify that the money **adds to** existing health spending rather than replacing it. [^13]

### What to watch
- **Collection.** Revenue is "very hard to predict." [^5] Six billionaires reportedly left before the cutoff. [^6] Watch for lawsuits over residency, and how much is actually collected.
- **Supplanting.** One-time money can quietly replace regular spending. The Finance Department's certification is the check, so read it.

### Who to press, and what to ask for
1. **Your Assemblymember and state Senator:** require a State Auditor audit of how the fund is spent, and publish every grant or payment by recipient.
2. **Controller and Board of Equalization candidates:** they'll sit on the Franchise Tax Board. Ask how they'll publish collections data without exposing individual taxpayers.

### Public records to request (CPRA)
Anyone can file a California Public Records Act request (the state's version of FOIA), with no reason required. Agencies must respond within 10 days, or 24 in unusual cases. [^15] Individual tax returns are confidential, but how the fund is spent isn't.

> **To the Department of Finance:** Under the California Public Records Act (Gov. Code § 7920.000 et seq.), I request each report and supplanting certification submitted to the Legislature under Government Code section 16355(f) concerning the 2026 Billionaire Tax Reserve Fund, with supporting worksheets.

## Both sides
- **For:** SEIU-UHW, Bernie Sanders, CA Democratic Party, CA Labor Federation, Sacramento Bee. Billionaires gained the most from federal tax cuts, and the money prevents clinic and hospital closures. [^10]
- **Against:** Gov. Newsom, Becerra, Hilton, the Business Roundtable, CMA, CTA, Planned Parenthood, LA Times. It's volatile, it drives out taxpayers, and it doesn't fix structural funding. [^10][^16][^17]
- Poll: 45% support among likely voters, down 3 points from six weeks earlier (UC Berkeley–LA Times poll, late Sept 2026). [^7]

## Official voter guide (condensed) with annotations
- Official title: Imposes One-Time Tax on Certain Taxpayers. Initiative Constitutional Amendment and Statute.
- Summary: A one-time 5% tax on taxpayers with assets over $1 billion, mainly for health care. Exempt from the school-funding formula and the state spending limit.
- Fiscal impact: A temporary revenue increase of tens of billions of dollars over several years, plus a possible ongoing loss of under $1 billion a year in income tax from billionaires.
- A YES vote means: The state would collect a one-time tax from billionaires equal to 5 percent of their wealth.
- A NO vote means: The state would not collect a one-time tax from billionaires equal to 5 percent of their wealth.
- Argument for: "Trump slashed healthcare funding to pay for billionaire tax breaks," ending coverage for over a million Californians and raising premiums for millions more. Billionaires should pay their fair share.
- Argument against: A "flawed, one-time tax scheme that hurts our economy." Damages the budget, does nothing to lower health care costs, and has no safeguards or accountability.
- Supporters: Sen. Bernie Sanders, SEIU-United Healthcare Workers West
- Opponents: CA Primary Care Association, CA School Boards Association, California Taxpayers Association, CA Teachers Association, CA Medical Association

Annotations (what the booklet leaves out):
- (general) Sponsor SEIU-UHW is a health care workers' union; the LA Times reported the spending could benefit its own members. It sponsors Prop 44 too, and has used initiatives as leverage against health companies since 2011. [^7][^10]
- (summary) If Prop 41 or Prop 42 gets more yes votes than Prop 40, Prop 40 is voided even if it passes. The booklet doesn't flag this on Prop 40's page. [^10]
- (pro) "Over a million" refers to federal Medicaid cuts in the 2025 budget law. Prop 40 is one-time money against an ongoing shortfall, which is why Planned Parenthood and the CA Medical Association say it doesn't fix long-term funding. [^10]
- (con) The opposition is funded mostly by billionaires who would pay the tax: Building a Better California, with $100M+ from Sergey Brin. Several billionaires reportedly left the state around the Jan 1 cutoff. [^7][^6][^1]

## Sources
[^1]: Wikipedia, SEIU-UHW (secondary). https://en.wikipedia.org/wiki/SEIU_United_Healthcare_Workers_West
[^2]: Ballotpedia, SEIU-UHW. https://ballotpedia.org/SEIU-UHW
[^3]: AP on the 2% offer (June 18, 2026). https://abcnews.com/Business/wireStory/california-labor-union-offers-scale-back-billionaire-tax-134014894
[^4]: Euronews on European wealth taxes (Sept 29, 2025). https://www.euronews.com/business/2025/09/29/wealth-taxes-in-europe-who-collects-them-and-how-much-do-they-raise
[^5]: LAO. https://lao.ca.gov/ballot/2026/prop40-110326.pdf
[^6]: Fortune, six billionaires left (Mar 17, 2026). https://fortune.com/2026/03/17/6-billionaires-left-california-billionaire-tax-newsom-brin-page-thiel-spielberg-revenue/
[^7]: GV Wire (Oct 13, 2026). https://gvwire.com/2026/10/13/california-union-leaders-billionaire-tax-faces-pushback-from-fellow-labor-groups/
[^8]: SoS, contribution totals. https://www.sos.ca.gov/campaign-lobbying/helpful-resources/measure-contributions/2026-ballot-measure-contribution-totals/proposition-40-imposes-one-time-tax-certain-individuals-and-trusts-initiative-constitutional-amendment-and-statute
[^9]: KUOW, Washington capital gains receipts (May 2024). https://www.kuow.org/stories/capital-gains-tax-receipts-in-washington-tumble
[^10]: CalMatters guide. https://calmatters.org/california-voter-guide-2026/proposition-40-billionaire-tax/
[^11]: Ballotpedia News (Oct 26, 2026). https://news.ballotpedia.org/2026/10/26/with-798-9-million-in-contributions-and-counting-2026-is-the-most-expensive-ballot-measure-election-cycle-in-california/
[^12]: CalMatters fact check (Oct 2, 2026). https://calmatters.org/health/2026/10/prop-40-billionaire-tax-fact-check/
[^13]: Prop 40 legal text (annotated by GrowSF). https://growsf.org/voter-guide/san-francisco-voter-guide-november-2026-election/measures/prop-40/legal-text/
[^14]: LAO, state fiscal functions (Mar 21, 2013). https://lao.ca.gov/handouts/state_admin/2013/State-Fiscal-Functions-032113.pdf
[^15]: First Amendment Coalition, CPRA deadlines. https://firstamendmentcoalition.org/resources/explainers/explainer-cpra-delays
[^16]: CalMatters, Newsom positions (Oct 9, 2026). https://calmatters.org/politics/2026/10/newsom-tax-propositions-november-election/
[^17]: Wikipedia, 2026 billionaire tax initiative (secondary). https://en.wikipedia.org/wiki/2026_California_billionaire_tax_initiative
[^18]: OECD, role and design of net wealth taxes. https://www.oecd.org/en/publications/the-role-and-design-of-net-wealth-taxes-in-the-oecd_9789264290303-en/full-report/component-4.html
[^19]: CalMatters (Oct 2020), union's ballot strategy. https://calmatters.org/politics/california-election-2020/2020/10/california-healthcare-union-proposition-23/
[^20]: Fortune, Thiel donation (Jan 14, 2026). https://fortune.com/2026/01/14/peter-thiel-makes-his-biggest-donation-in-years-to-help-defeat-californias-billionaire-wealth-tax/