Deep-Blue California Just Voted Down a Billionaire Tax. At Least Seven Billionaires Had Already Left.

California is about as blue as it gets, and last week was a big night for Democrats. But when voters were asked to slap a special tax on the state’s billionaires, they said no.

Proposition 40 failed, the Associated Press projected Monday. It would have been the first tax of its kind in the country.

What it would have done

The measure called for a one-time 5% tax on everything owned by Californians worth more than $1.1 billion, with a smaller, phased-in rate for those worth $1 billion to $1.1 billion, NBC News reported. It would have counted anyone living in the state as of Jan. 1, 2026, even if they moved out afterward.

Supporters said it would raise about $100 billion over five years. Ninety percent would have gone to the state’s Medicaid health program, known in California as Medi-Cal.

How the vote went

With most ballots counted, about 53% voted no and 47% voted yes, the Los Angeles Times reported. It trailed from the first day of counting. Orange County voted it down by a wide margin, while Los Angeles and San Francisco, home to most of the state’s roughly 200 billionaires, backed it.

California counts mail ballots that arrive up to a week after Election Day, so the final numbers can still shift a little. But the result is called.

The billionaires were already leaving

Critics warned the tax would drive the richest people out of the state. According to Reason, at least seven billionaires, including Steven Spielberg, Google co-founders Larry Page and Sergey Brin, Uber co-founder Travis Kalanick and PayPal co-founder Peter Thiel, have already left California.

Stanford economists Benjamin Jaros and Joshua Rauh ran 100,000 simulations. In 85% of them, the tax ended up costing California more in lost income-tax money than it brought in, Reason reported. The state’s own nonpartisan budget office warned it could shrink yearly income-tax revenue by up to $1 billion.

Not just a Republican win

Opposition crossed party lines. Newsom, a Democrat who may run for president in 2028, was against it, and the AP called its failure a win for Democratic leaders who opposed it. NBC News called it “a blow to progressives.”

Money mattered, too. Groups fighting the tax raised about $130 million, compared with more than $33 million for supporters, Reason reported.

The lesson for every state eyeing the rich: people who can move, will. And even California voters seem to know it.