California Voters Reject Prop 40 Billionaire Tax After Seven Moguls Fled With $540 Billion in Wealth

California's Proposition 40 billionaire tax appears headed for defeat after the 3 November vote, with Stanford researchers estimating that seven wealthy residents had already taken $540 billion (£412 billion) beyond its potential tax base.

Associated Press returns showed about 53% against the measure and 47% in favour, with counting continuing. Supporters had cast the one-time 5% tax as a way to make the ultra-wealthy pay their fair share. It would have funded healthcare, food assistance, and education programmes facing federal cuts. The proposal applied to residents with more than $1 billion (about £750 million) in assets as of the January cutoff.

The Exodus That Came First

Opponents warned for months that billionaires could flee if the tax passed. The sharper point, which rivals largely sidestepped, is that many had already gone. Their early exits became central to the debate.

A working paper by Stanford economists Joshua Rauh and Benjamin Jaros, published through the National Bureau of Economic Research, found that seven billionaires left California before the January 1, 2026 residency cutoff, taking roughly 30% of the state's billionaire wealth out of reach of the tax.

Peter Thiel, Larry Page, and Sergey Brin were among those the researchers identified as having moved. Under their estimates, California arguably risked losing both the revenue and the tax before voters ever marked a ballot.

A Hundred Billion That Was Never There

Supporters, led by the Service Employees International Union's healthcare arm, projected the tax would raise $100 billion (£75 billion) over several years. That projection became a major campaign talking point. The Stanford paper estimated it would have collected closer to $30 billion (£23 billion), less than a third of that, once the early exits were counted. The authors also argued that lost future income-tax revenue from departing billionaires would have left the state worse off overall.

The measure's designers pushed back. Economist Gabriel Zucman, who helped shape the proposal, contended that some high-profile leavers, including Brin, probably remained California tax residents on the cutoff date because of their continuing ties to the state. That dispute over who actually counts as gone sat at the centre of the fight.

What Californians Stand To Lose

The stakes reach past the billionaires. Most of the revenue was meant to shore up the state's healthcare system against federal Medicaid cuts, with the rest going to food aid and schools. The potential shortfall raises difficult questions about funding. Those are services ordinary Californians use, and the budget still leans heavily on a small group of top earners whose income taxes the state cannot easily replace.

Billionaire-backed opponents raised about $389 million (£297 million), with Brin contributing around $102 million. Supporters raised about $33 million (£25 million). The fight was among California's most expensive ballot campaigns. Governor Gavin Newsom, a Democrat, opposed the measure, warning it could drive wealthy residents out.

A Door Closing on Future Attempts

Proposition 42, a billionaire-backed measure that would bar new state taxes on financial assets and other personal property, while blocking most retroactive taxes, was also heading towards approval. Associated Press returns showed about 52% support.

Together, the apparent results hand Silicon Valley a win and could make any future wealth tax far harder to revive.