AP Photo / Jae C. Hong

Last month, I promised to devote this column to a historic measure on the California ballot next month—Proposition 40, which would require the state’s 200 to 250 billionaires to pay a one-time, 5 percent tax on their net assets. Unprecedented on American soil, and untried anywhere else in the world in its form and scope, Prop 40 would break new ground on many fronts.

As the election date approaches, the billionaire class has spent more than $1 million a day on advertising and other messaging to oppose this measure. I guess that’s not surprising. When you need to convince people that 2+2 doesn’t equal 4, you can’t let up.

Despite the mountains of media devoted to Prop 40, including a lengthy recent article in The New Yorker, the measure’s core components are still poorly explained. Even the state’s ballot information pamphlet misses the mark, and the standard arguments included from the measure’s proponents and opponents barely help.

Because of this chaos, I’m devoting this column—my last before this year’s mid-term elections—to clarifying some key elements on Prop 40; and, hopefully, to allaying many of the fears about its consequences. Before we begin, I want to lay my cards on the table. As a California resident with some wealth of my own, I am finding the billionaires’ arguments against Prop 40 to be shameful, even embarrassing. I say this for eight simple reasons:

• The main criticism leveled against this tax is that it will drive the state’s high-level entrepreneurs to leave California, which would rob us of tax revenue rather than add to it. Sorry to put it this way, but this is either a sign of ignorance or a purposeful lie. Unless a billionaire moved out of state before this past January (and the vast majority didn’t), Prop 40 is structured to make them pay this tax no matter where they go. And since it’s only a one-time tax, those who stay here won’t pay any more than they would if they left the state.

• As proof that the fear of billionaire flight is nothing but a scare tactic— and that even the billionaires themselves don’t believe it—look at the trends in the state’s billionaire wealth since the measure was proposed. Despite the threat of Prop 40 passing, billionaire wealth in California has grown throughout this year, with the state now drawing 85% of the nation’s venture capital. According to the Los Angeles Times, California has already attracted some $330 billion in venture capital this year. That’s 10 times more than what’s come to any other state. But that hasn’t stopped billionaires like Google co-founder Sergey Brin from whining about this tax.

  Brin, along with California’s other top billionaires—Google’s other co-founder, Larry Page; Meta’s Mark Zuckerberg; Oracle’s Larry Ellison (through 2020), and Nvidia’s Jensen Huang (since 2021) hold nearly $1 trillion in business wealth, about 40% of total California billionaire wealth. Although these billionaires have seen their wealth grow 322% from 2023 to 2025, they’ve gotten away with paying only 0.04% of that wealth in annual California income tax. According to a recent article in The New York Times Magazine, neither Brin nor Page paid a cent of income tax in the years 2019, 2020, and 2023, even though their stakes in Google increased during those years by $60 billion.

  Obviously, Brin could pay the proposed 5% billionaire tax with his pocket change and still be a multibillionaire. But that hasn’t stopped him from appearing to move out of California last December, and scaring California Gov. Gavin Newsom so thoroughly that Newsom, long considered a man of the people, has had the gall to oppose Prop 40.

  For his part, Newsom claims that a better approach to reining in economic inequality is a national wealth tax. One can only assume that the governor took this position knowing that the current U.S. Supreme Court has already indicated that it doesn’t like federal wealth taxes, but is fine with the idea on a state level. To add to Newsom’s cravenness, he’s also declared his support for Prop 42, a measure that prohibits new state personal property taxes, certain retroactive taxes, and generally constrains the state’s ability to pass new taxes to pay for future needs. Prop 42 is widely regarded as a distraction designed to keep Prop 40 from passing—a fact that makes one seriously wonder about Newsom’s true loyalties.

• Even if California billionaires could find a way to avoid this tax, that would be demonstrably undeserved. More than 80% of their wealth, which now totals an estimated $2.4 trillion, is unrealized capital gains, and thus not recognized as taxable income. That means that approximately $1.92 trillion of Californians’ wealth, which could functionally be regarded as income, has gone untaxed for years. It’s worth noting that almost two-thirds of that wealth has been accumulated in just the last few years.1 Meanwhile, wages for an estimated 13.5 million Californians haven’t even kept up with the rising cost of living.

• Despite what you may have heard, Prop 40 is pretty solidly designed, and an ingenious first step toward greater tax fairness. But that hasn’t kept Prop 40 opponents from framing the measure as an operational mess. An example is the complaint voiced by two prominent California billionaires, Garry Tan (of Y Combinator) and tech entrepreneur Mark Cuban, in The New Yorker. In order to pay this tax, Cuban said, start-up entrepreneurs who are asset-rich but still cash-poor would have to come up with money they don’t yet have.

  This is nonsense, on two levels. First, people with abundant assets use those assets as collateral to take out low-interest loans all the time—without owing any tax on those funds. This is how the wealthy easily expand their wealth. Given that freebie, it should not be a big challenge for an asset-rich billionaire to pay a 5 percent tax. Second, in the rare cases where the tax payment is a challenge, Prop 40’s architects (Gabriel Zucman and Emanuel Saez, who are internationally renowned economists, and have spent years studying the history and legalities of a wealth tax) saw the possibility of this problem coming a long time ago. To avoid it, they created a flexible payment system: Anyone with the assets to qualify as a billionaire can defer or sequence their tax payment over the course of five years. (If you’re a glutton for more nonsense, check out the “get the facts” pages on the No on Prop 40 website, and my parsing of a few of its arguments in the footnote below.2 You might also want to contrast what you find with the fact sheet offered by the Yes on 40 team.)

• Will Prop 40’s various elements withstand legal challenges? In some cases, yes; with others, the state legislature may have to do some tweaking. That’s often the case with ballot measures. But here, too, fears have been vastly overblown. Take the measure’s retroactive requirement—that the tax isn’t on one’s assets when the measure goes into effect, in January, 2027, but on the assets’ value a full year earlier. While that might sound like an unfair trap, there is an abundance of legal precedent for retroactive taxation. (I’m told the measure’s drafters learned they could have set the valuation date even earlier than they did, but chose January, 2026, just to be safe.)
• Isn’t there a better way to tax wealth at the top? Perhaps. The myriad leaks that Congress and successive presidents have opened in our tax code over the years should have been plugged a long time ago. Those fixes include taxing unrealized capital gains; raising tax rates on investment gains to match the higher rates that the working class has to pay on their wages and salaries; and closing the “stepped-up basis” loophole, which allows the wealthy to pass assets to their heirs without paying taxes on those assets’ gradual rise in value. But these changes each take years to craft, rally support for nationally, pass in Congress, and then put into effect. And California needs these funds now. To borrow from the old saying, let’s not let the perfect be the enemy of the good, especially when something plenty good is sitting right in front of us, ready to solve an urgent problem.
• As you probably know, Prop 40, which could raise as much as $100 billion, assigns almost all of that money to restoring funding for healthcare insurance (a scant 10% goes to food programs and K-12 education). These funds would be used, immediately, to restore the deep cuts in healthcare that were made by the Trump Administration’s 2026 budget bill. As of now, there is no other viable plan for how to keep up to 3.5 million Californians from losing their healthcare insurance when the Trump cuts fully take effect. Those cuts are also expected to cause hospital closures across the state, and thousands of healthcare workers to lose their jobs.
• Could this tax become permanent, and filter down in some form to millionaires? That’s always a possibility with legislation, and the measure’s drafters acknowledge that Prop 40 is a legal and political experiment. But any extension of this tax could only be imposed after public debate, legally and economically sound adjustments, and legislative approval. More important, if Prop 40 ends up being the first step in higher tax rates for the wealthy, who have been living off a tax code increasingly rigged in our favor, that would be a helpful and welcome change.

If you’re still worried about Prop 40’s potential imperfections, think about it this way: It is now abundantly clear that economic inequality has become a major issue across the U.S. (which I’ve taken pains to document this year in column after column); and the Trump Administration’s cuts to healthcare and other programs that help the working class have only made things worse. If a liberal state like California won’t do something about this problem, what message does that send to our political leaders, most of whom will look for any excuse they can find to maintain the status quo, and please their wealthy donors?

For some reason, a cohort of California’s billionaires, led by Brin, either don’t see this problem or don’t care about it. By the time the mid-terms are over, it’s estimated they will have spent more than $350 million to defeat Prop 40 (and to pass three repressive anti-tax measures: Propositions 41, 42, and 43). That’s more than 10 times what the pro-40 campaign could gather to get their message out.

Yes, money is very powerful, but votes can be more powerful. To my fellow Californians, I want to be candid. Let’s show the billionaire class that they don’t run this state. We do.

See you next month. I’ll post again sometime after the mid-term elections, so we can talk about how this measure—and some of the candidates who’ve shown a credible commitment to reducing economic inequality—have all fared.