California Democratic Executive Committee Votes for 5% One-Time Billionaire Wealth Tax

The California Democratic Party executive committee met recently at a beachfront hotel in San Diego, where roughly 380 members voted to support Proposition 40. The proposal would impose a one-time 5% wealth tax on the state's approximately 200 billionaires with net worth exceeding $1 billion, and has secured more than 60% supermajority support within the party. California voters will decide on the measure in a referendum on November 3, 2026. Under the proposal, California residents with net worth of at least $1 billion on January 1, 2026, who still maintain that level on December 31, 2026, would owe the state a tax equivalent to 5% of net worth. Directly held real estate is excluded from the tax base.

The proposal was initiated by the United Healthcare Workers West division of the Service Employees International Union. Vermont Senator Bernie Sanders and California Congressman Ro Khanna have both publicly endorsed the proposal. Sanders said the tax should be adopted nationwide and indicated he would soon introduce a federal wealth tax bill targeting billionaires.

The California Medical Association, the California Teachers Association, and the state firefighters' union also oppose the measure. In June, after the proposal was confirmed for the ballot, Governor Newsom communicated with the unions in hopes of withdrawing the proposal. Before the withdrawal deadline, the unions offered an alternative with the rate reduced to 2%, seeking to exchange union contract support through private negotiations, though union leaders denied those claims.

Seth is one of the co-authors of the California wealth tax proposal.

Evidence from other jurisdictions shows that wealth taxes have precedent for affecting the migration of high-net-worth individuals. After a New Jersey hedge fund manager moved to Florida in 2016, the state's revenue forecasts were noticeably affected. In 2022, Illinois's wealthiest resident, Ken Griffin, moved his company from Chicago to Miami. In 2023, after Washington state's capital gains tax survived judicial challenge, a prominent resident moved to Florida. In 2020, the world's richest person relocated his personal residence and company from California to Texas. After Norway raised its wealth tax in 2022, several of its wealthiest citizens moved to Switzerland. France lost substantial numbers of millionaires over decades due to its wealth tax, eventually abolishing it in 2018 and retaining only a real-estate-focused wealth tax.

Google co-founder Sergey Brin relocated to the Tahoe side of Nevada in 2025, ahead of the January 1, 2026 residency determination deadline. Brin has contributed approximately $82 million to Building a Better California, the committee opposing Proposition 40. The committee has raised more than $118 million from fewer than a dozen donors. Peter Thiel separately donated $3 million to the California Business Roundtable, one of the organizations opposing the proposal.

Because residency status was locked as of January 1, 2026, individuals leaving California after that date remain subject to the tax. Polls show that a majority of California Democratic voters support the proposal, and it also holds a narrow majority among all voters. The opposition campaign says the measure disrupts the state budget, harms the economy, and affects the future.