California Can't Afford the Wealth Tax Experiment
FACT:No. Prop 40 is a flawed tax scheme – not a reliable solution to federal funding cuts.
Economists from Stanford University found Prop 40 will cost the state $25 billion over time, potentially forcing cuts to education, healthcare and every other program that relies on General Fund revenue. Prop 40 also faces significant legal and constitutional challenges that could delay implementation for years or prevent it from taking effect altogether.
FACT: No. Prop 40 won’t be a “one-time” tax – even its authors admit it is an experiment that may become permanent. When the money runs out, there’s no plan to ensure politicians won’t be back with a different tax on someone else.
Economists warn Prop 40 would discourage investment and drive wealthy taxpayers – who pay nearly half of state’s income taxes – and businesses out of California. Prop 40 will permanently and drastically reduce the state budget revenue that fund schools, healthcare, infrastructure and public safety, forcing other taxpayers to make up the difference
FACT: No. Prop 40 is not just a tax on billionaires. The measure contains a loophole and creates a new tax structure giving the State Legislature the ability to amend its provisions without a vote of the people. This means lawmakers could expand the tax beyond billionaires to additional assets and taxpayers. And with Prop 40 generating temporary, one-time revenue, new and higher taxes are inevitable.
Every Californian has a stake in a strong economy. If investment, employers, and capital leave California, the state collects less revenue to support schools, healthcare, housing, wildfire response, infrastructure, public safety, etc.
FACT: No. The French economists who co-authored Prop 40 describe it as an “experiment” and have acknowledged it could have unintended consequences. In fact, they’ve proposed similar wealth tax schemes in France and throughout the European Union – but nine countries have overturned their policies due to revenue loss and budget shortfalls.
Prop 40 is no different. The measure was pieced-together using a spreadsheet of estimates and assumptions. The authors actually admitted to using Forbes rankings and Wikipedia-esque sources as foundational data – not official, verified tax records.
California’s economy and funding for essential services should not be based on trial-and-error. We aren’t test subjects, and if this experiment fails, the consequences won't be theoretical.
FACT:No. Proponents base this estimate on information they got from a magazine - not economic or policy analysis. Stanford economists found the tax would only raise roughly $40 billion in the near term - but then cost the state far more than it raised, leading to an overall loss of $25 billion to California’s state budget.
FACT: No. Prop 40 includes no safeguards and accountability to ensure the money actually goes where it’s needed. Prop 40 does not require any of the funding to be spent on patient care and it undermines the state’s constitutional commitment to guarantee funding for public education. It’s a giant blank check to the Legislature - not a targeted, well-designed spending program. Furthermore, Prop 40 complicates the passage of smart, proven tax measures that provide stable funding, accountability and results.
FACT: No. Nothing in Prop 40 requires funding to be allocated towards lowering healthcare costs, reducing insurance premiums, or expanding patient care. The measure has no meaningful safeguards or accountability to ensure billions in new revenue is used to support those who need it most – rather than health insurance companies and executive bonuses.
FACT: No. Prop 40 shortchanges California schools. In fact, the measure exempts itself from Proposition 98, a voter-approved constitutional guarantee that protects funding for education. A recent analysis found that Prop 40 would shortchange classrooms by $3 billion annually.
FACT: No. Prop 40 would set a dangerous precedent by allowing California to tax accumulated wealth and assets for the first time in state history. Californians already pay taxes on income when they earn it, and Prop 40 could allow that same income to be taxed again when it is saved in accounts like retirement funds.
FACT: No. This is not true. Prop 40 doesn’t guarantee any funding will support healthcare workers, hospitals or frontline patient care. Without safeguards or accountability, there is nothing requiring the money to protect healthcare jobs, and years of legal challenges could delay any funding from reaching providers. Cuts to revenue mean cuts to healthcare.
FACT: No. Rather than creating opportunity, Prop 40 is an untested tax experiment that could discourage investment, make it harder to build housing and infrastructure, and put family-supporting union jobs at risk. That's why educators, healthcare leaders, labor organizations, and housing advocates oppose Prop 40.