California voters reject billionaire tax despite national Democratic wins

California voters rejected Proposition 40, a proposed tax on billionaires, in the November 2026 midterm elections. The measure lost despite a strong showing for Democratic candidates across the nation. Economists disagree on whether the failure signals a rejection of wealth taxes in general or a specific dislike of this proposal. Gabriel Zucman, an economist at UC Berkeley, blames the result on the sheer volume of money spent against the measure. Opponents of the tax deployed nearly $400 million in campaign spending. This included funds used to attack competing ballot measures. Zucman notes that this made it one of the most expensive ballot fights in history. He states that the spending gap was critical because anti-tax ads dominated television and mail. In other high-profile races, such as the Texas Senate contest, both sides spent large sums. For Proposition 40, the pro-tax side had negligible resources compared to the billionaire-funded opposition.

Joshua Rauh, a professor at Stanford, argues that money alone does not explain the outcome. He points to voting patterns in the Bay Area. In these progressive counties, support for former Vice President Kamala Harris was overwhelming in 2024. Support for Proposition 40 was much lower in those same areas. Rauh suggests that voters who live near billionaires or work for them may have been more skeptical. He writes that proximity to the wealthy made voters more cautious than their baseline political leanings indicated. This pattern suggests that the electorate is not yet ready for a wealth tax, even in California. Rauh believes the defeat reflects a lack of broad enthusiasm for the concept rather than just a reaction to advertising.

The structure of Proposition 40 also drew criticism from traditional Democratic allies. The measure was a one-time tax rather than an annual levy. It allocated 90% of the projected revenue to health care. Only 10% was designated for food assistance and education. The California Teachers Association opposed the measure on this basis. The union argued that the proposal did not provide sustainable funding for schools. Governor Gavin Newsom also campaigned against the tax. He favored a federal wealth tax instead, arguing that wealth is mobile and can leave the state easily. Newsom stated that the fight for such a tax belongs at the federal level.

The defeat does not end the debate over wealth taxes. Zucman expects the issue to remain central in the new Congress. Many newly elected Democratic senators campaigned on curbing billionaire influence. Rauh anticipates more proposals in the coming years but sees little chance of passage under President Trump. He expects the issue to define the 2028 election. Rauh also warns that legal hurdles remain. He argues a federal wealth tax could be classified as a direct tax. The U.S. Constitution imposes strict rules on direct taxes, requiring them to be apportioned by state population. The 16th Amendment exempted income taxes from this rule but did not mention wealth taxes. Legal scholars remain divided on whether this constitutional requirement would invalidate a national wealth tax.