Greta Tolich is an environmental management and protection senior and a political opinion columnist for Mustang News. The opinions expressed in this article do not necessarily reflect those of Mustang Media Group.
What is Proposition 40?
California was hit with Medicaid cuts, like many other states, under the Trump administration. California’s Medicaid program, Medi-Cal, helps fund necessary health care for low-income people. As a result of the $30 billion federal Medicaid cut, an initiative known as Proposition 40 will be on the ballot on Nov. 3.
Proposition 40, or California’s Billionaire Tax, is a voter-proposed initiative. Proposition 40 is a one time tax for individuals, married couples or a trust that is above $1 billion, as defined by the initiative. Proposition 40 applies a 5% tax on those with a net worth between $1 billion and $1.1 billion, which the majority of California’s billionaires would fall into. Currently, California is home to 200 billionaires.
READ MORE: Proposition 40 aims to fund health care through a billionaire wealth tax
Roughly 90% of the tax would go to public health and Medi-Cal and the rest would go toward education and food assistance programs, like Supplemental Nutrition Assistance Program, or SNAP.
How is net worth calculated?
The tax is based on the net worth of the person or entity being taxed. Net worth is calculated by adding the total value of assets — which could belong to an individual, a family, a couple or a trust — minus their debts. The initiative has various exceptions for net worth calculations, such as property holdings, tangible personal property held outside California and certain pensions, retirement accounts and deferred compensation.
The tax was designed by several economics professors, including Emmauel Saez, from UC Berkeley. Saez specializes in inequality and taxation. Through his research, he found billionaires in California are 25 times wealthier than they were in 1982.
Opposition to Proposition 40
Critics of Proposition 40 argue it will drive billionaires out of California. But really how bad would that be? Despite all the wealth these billionaires accumulate, their contributions are quite small when compared to the proportion someone in a salaried job pays.
For example, Mark Zuckerberg’s net worth increased by 175% from 2023 to 2024. Saez, who developed the formula for the tax, found that income tax revenue from billionaires in California collectively contributed to less than 3% from 2023-2025 fiscal years.
Much of billionaires’ wealth, such as shares, cannot be taxed under the U.S tax code. So while Zuckerberg’s wealth continues to grow, his contributions to the state remain relatively static and minimal.
If Proposition 40 is passed, Zuckerberg will pay a one time tax of $13 billion. While this is an enormous amount of money, Zuckerberg’s wealth often shifts frequently because of the stock market.
For example, on Sept. 21, his net worth increased by $25 billion. Similarly, there have times when his wealth has declined. On Sept. 25 his net worth dropped by $8.9 billion, which pushed him to 6th, instead of 4th, in billionaire rankings. This is all to say that to Mark Zuckerberg, $13 billion is just another day in the stock market.
Proposition 40 opponents, like billionaire Peter Thiel, the co-founder of Palantir, have threatened to relocate their businesses if the tax is passed. This remains the opposition’s main leverage point against the tax.
Yet, a study from the Institute for Policy Studies found that progressive taxes, like a wealth tax on the ultra-rich, do not prevent the number of millionaires from growing. The study observed the results after wealth taxes were implemented in Massachusetts and Washington State. The number of millionaires increased by 38.6% in Massachusetts and by 46.9% in Washington, while these taxes created and funded programs that benefited residents.
Although critics argue these policies would prompt high-income individuals to leave the state, the study found the millionaire population continued to grow in states that raised taxes on high-income earners. Furthermore, the high-income groups can help address inequality and fund programs for health care, education and infrastructure that communities need to thrive.
The “loophole”
Opponents of Proposition 40 have focused heavily on what they call a “loophole” that would allow a future legislature to expand the wealth tax and lower the $1 billion threshold.
The claim overstates what the initiative would allow. In reality, Proposition 40 is explicitly designed to raise revenue through a one-time tax on billionaires to support California’s health care, education and food assistance programs. Expanding the tax to apply to average Californians, or non-billionaires, would violate the act’s purpose.
While the ads may be convincing, voters should also consider who is paying for them and how much. California billionaires are major contributors to the $90 million spent on opposition ads for Proposition 40.
Their opposition is not about protecting voters from future taxes but protecting themselves.
Why they won’t leave
I wouldn’t want to leave California either; it’s 78 degrees in October. Jensen Huang, who is the CEO of NVIDIA, has said NVIDIA will stay in Silicon Valley because of its world class talent pool.
Huang, who is a billionaire, said he will not relocate.
“We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it. I’m perfectly fine with it,” Huang said.
For billionaires like Huang, with a net worth of $190.5 billion, Proposition 40 wouldn’t affect them — they will still have yachts, eat dinner and put gas in their cars. But for those in need, it could mean the difference between having basic needs met, like health insurance and SNAP benefits, and not.
To put things into perspective, the combined wealth of California’s billionaires is $497 billion. If California’s billionaires were their own country and their GDP was $497 billion, they would rank 35th in the world.
Vote NO on Proposition 41 & Proposition 42
The opposition to Proposition 40 are Propositions 41 and 42, initiatives that require audits of new tax programs and prohibit new and retroactive taxes on personal property. Both of these initiatives are direct measures intended to kill Proposition 40.
Supporters of Proposition 41 and 42 have spent $90 million on advertisements to persuade voters to vote “yes.” In contrast, Proposition 40 has spent less than $10,000. We cannot let money influence our policies over and over again. For anyone in California who is not a billionaire — or funded by billionaires like Gavin Newsom — Proposition 40 is for you.
Vote YES on Proposition 40
Proposition 40 is about the people of California. Without it, necessary programs will be cut while billionaires will remain unaffected as their wealth continues to grow. For Mark Zuckerberg or Larry Page, Proposition 40’s one-time tax is ineffectual in the grand scheme. For Californians who rely on Medi-Cal, it could mean their continued access to health care, nursing care, medication and basic necessities.
California’s billionaires are wealthy because of the people, universities and infrastructure that it provides; it’s fair to ask them to contribute back to the rest of California’s wealth. Vote yes on Proposition 40 — and vote no on Propositions 41 and 42 — because California should work for the people who live here, not just the billionaires who profit from it.