How California's ultra-wealthy prepare to fight proposed 'world's first billionaire tax'

California’s ultra-rich are reportedly preparing their legal strategy to fight the world’s first billionaire tax if voters approve it in early November. If approved, it will be the world’s first billionaire tax.

Tech billionaires raised more than $340 million to defeat “Proposition 40,” a one-time five percent wealth tax that will fund health and education, the Guardian reported.

The campaign they are funding is reportedly spending more than $1 million a day to defeat the measure, according to state finance records.

What is Proposition 40?

Californians will vote on the ballot measure, Proposition 40, in early November. If passed, it would require a one-time 5 percent tax on the state’s billionaires, with the proceeds mostly funding health programs along with some education and food aid.

Proposal 40 “imposes a 5% tax on certain taxpayers with assets over $1 billion.”

California’s proposed tax would go much further than an income tax. It focuses on an individual’s entire net worth and applies to billionaires who have lived in the state at any time since Jan. 1, 2026, Bloomberg reported.

The measure has divided Democrats in the state, with some expressing enthusiastic support and others rejecting the proposal because it is only a one-time payment and most would only fund certain health care programs.

Proponents and opponents alike see the billionaire tax as a potential first step toward a multistate wealth tax. With California having more billionaires than any other state, Prop 40 is seen as setting the stage for more referenda on wealth inequality across the country.

Who is for and against Proposition 40?

California has roughly 250 billionaires, according to the New York Times.

Major unions and state progressive politicians such as Vermont Senator Bernie Sanders and California Congressman Ro Khanna support Prop 40. Supporters include: US Senator Bernie Sanders; SEIU United Healthcare Workers West

But both Democratic and Republican candidates for governor, as well as organizations such as Planned Parenthood Affiliates of California, the health group’s lobbying arm, oppose it. Opponents include: California Primary Care Association; California School Boards Association; California Taxpayers Association

Among its fiercest critics are the tech billionaires who would be directly affected.

How do billionaires plan to fight the weather tax?

The California Business Roundtable, a lobbying group representing some of the state’s most powerful companies, would take note of the legal challenges, CEO Rob Lapsley said, according to Bloomberg.

The group, which represents technology, energy and other corporate interests in the state, has retained Elizabeth Prelogar, the Biden administration’s top lawyer at the U.S. Supreme Court, to help lead the effort, Lapsley said.

“Our approach to defeating Proposition 40 is based on a comprehensive strategy that includes both the ballot box and the courts,” Lapsley said in a statement to Bloomberg News. “We will be fully prepared to file a legal challenge immediately after the election if we have to defeat this measure in court.”

The group is working closely with billionaires affected by the tax to formulate a legal strategy, sources told Bloomberg.

Opponents of estate taxes reportedly hoped the Supreme Court would use the case, Moore v. United States, to establish constitutional limits on the taxation of unrealized gains. Ultimately, the court upheld the tax, avoiding a sweeping ruling that could have broader effects on property taxes.

The California Business Roundtable has raised at least $700,000 to oppose Proposition 40 through its political arm, according to campaign records cited by the report.

Advertising strategy

Previously, the campaign fighting the billionaire tax placed the ad on television, digital and streaming platforms across California. It begins with quiet, ominous music, and California Medical Association president René Bravo, dressed in a white lab coat, says, “The people pushing Prop 40 say it’s supposed to improve health care. That’s not true,” The Guardian reports.

The campaign reportedly debuted with similar ads claiming that teachers, carpenters and firefighters also oppose the wealth tax, calling it a “dangerous experiment.”

Campaign messaging has focused on how the tax would hurt “doctors, teachers, small businesses, working families and public safety,” with no mention of the state’s billionaires. The No on Prop 40 campaign calls it a “tax for everyone.”

But the three anti-wealth tax campaigns draw almost all of their funds from Silicon Valley money-laden Super Pacs, according to campaign finance records.

Since July, committees opposing Prop 40 and supporting Props 41 and 42 have received a total of more than $297.8 million, most of it from a Super Pac called Building a Better California, the report added.

The three campaigns spend much of their fortunes on an army of consultants tasked with everything from lobbying politicians to working on media strategy.

Consultants include the Republican-leaning law firm Nielsen Merksamer, known for fighting for tobacco companies, and the political consultancy PCI Campaigns, known for fighting proposals that sought to repeal the death penalty and require condom use in pornographic films.

Who are the biggest donors to the campaign?

Donors to the “No” campaign are a who’s who of Silicon Valley, including Palantir co-founder Peter Thiel, former Google CEO Eric Schmidt, DoorDash CEO Tony Xu, Stripe CEO Patrick Collison, crypto tycoon Chris Larsen and several high-profile venture capitalists, The Guardian reported.

The biggest donor by far is Google co-founder Sergey Brin, who has contributed at least $102 million to the tax fight, according to campaign finance records.

In second place is Schmidt, who donated more than $42 million.

By comparison, the Yes on 40 campaign raised a total of $33 million, mostly from health unions sponsoring the measure.

Will this proposal pass?

According to the Guardian, a recent poll for Prop 40 shows it is favored to pass, but its lead has shrunk in recent weeks as the opposition campaign has increased spending.

A University of California poll in late September showed that 45% of voters were likely to vote for the tax, while 42% voted against it. Just a month earlier, the proposal had a 7% lead.

What will stop the billionaire tax?

There are two separate countermeasures that opponents of Prop 40 successfully placed on the November ballot. These are propositions 41 and 42.

Prop 41 directly targets the billionaire tax, while Prop 42 is more of a general proposal to protect individuals from some new taxes.

If one of those measures gets more yes votes than Prop 40, it would stop the billionaire tax from taking effect — even if it passes, the report added.