SACRAMENTO, CA — This week, the No on 40 coalition is fact-checking the false and misleading claim that Proposition 40 is just a tax on billionaires and won’t impact you. The reality is that Proposition 40 sets a dangerous precedent as the nation’s first net-wealth tax and includes a loophole that empowers the State Legislature to amend it without going back to voters. This sets the stage for the tax to be expanded, which proponents are already planning to do.
KEY QUESTIONS: Why does Prop. 40 allow the Legislature to amend the measure without returning to voters for approval? What guarantee do voters have that this is actually a one-time tax?
THE CLAIM: Proposition 40 is just a tax on billionaires and won’t impact you.
THE FACTS:
Prop. 40 creates an entire new category of taxation. This would be the first net wealth tax in modern U.S. history. And the French academics who drafted Prop. 40 see California as the ideal place to test their idea, affirming that: “It’s going to be an experiment. We see the results, and then we decide whether that experiment works, is promising.” Taxes like this may target a small subset of Californians to start, but that’s not where they end.
It includes a loophole empowering the Legislature to expand it without going back to voters. The special interests behind the measure wrote it to give the State Legislature power to amend the measure — without voter approval. Section 50310 of Proposition 40 states: “The Legislature may amend the 2026 Billionaire Tax Act, by statute passed in each house of the Legislature . . . [with] two-thirds of the membership concurring, if the statute is consistent with and furthers the purposes of the 2026 Billionaire Tax Act.”
This opens the door to everyone being taxed. As Stanford economists warn, Prop. 40 “is presented as a one-time measure, but the Legislature can amend it by a two-thirds vote without returning to voters, reducing the procedural barrier to extending the tax beyond 2026, which effectively establishes the constitutional foundation on which future wealth taxes at any rate and threshold could be built.”
Proponents are already making plans to expand it. While Prop. 40’s backers pitch it to voters as a “temporary,” “emergency,” and “one-time” tax, they’re hatching plans for something much bigger. As one of the French architects put it recently: “California could absolutely implement an annual wealth tax…This one-time tax is just the starting point of what could be.” Another prominent proponent wrote: “The tax should not stop at billionaires, it must reach centimillionaires. The tax has to reach all fortunes $50 million and up.”
“One-time” taxes have a long history of being expanded and extended. One study of state tax hikes found more than half of temporary measures became permanent or were replaced with other tax increases.
Prop. 40 lays the foundation for more taxes and higher taxes. It’s already clear this tax won’t generate the revenue it’s promised. Stanford University research finds that Prop 40 will collect approximately $30 billion, less than a third of the $100 billion projected by proponents. At the same time, this “one-time” tax earmarks funds to needs that require reliable, sustained investment. When the money runs out, expect proponents to come back for more.
WHAT THEY’RE SAYING:
Stanford University Economist Joshua D. Rauh: “Despite the claims of a temporary measure, the act will likely not be a one-time tax in any meaningful sense. It would make a permanent change to California’s Constitution by removing the state’s existing cap on taxes on intangible personal property. Once that cap is lifted, future wealth taxes could be imposed at different rates, at different thresholds, and not necessarily only on billionaires.” (6/25/26)
California Farm Bureau Managing Director, Public Affairs and Communications Steven Fenaroli: “[Prop 40 will become] just another tax on farmers and ranchers…When my members are looking at Prop 40, they see this slippery slope that we seem to have in California.” (10/3/26)
USC Dornsife Provost Professor of Economics and Spatial Sciences Matthew Kahn: “Does the current one-time tax, and the expectation that this could happen over and over again in the future — that this is a precedent vote — does this act as a tax on effort and investment by young people and by entrepreneurs at every stage? Because I believe…this sets a precedent, and we’re going to start to see the revenue-starved Leviathan in Sacramento supporting initiatives to tax more and more of the wealthy. “ (10/12/26)
District Council of Iron Workers of California and Vicinity Political Director Xochitl Medrano: “We won’t stand by and let a tax that’s supposed to target billionaires turn into a trapdoor for working families and we won’t support policies that scare away the private investment that keeps our crane booms moving and our crews working.” (10/5/26)
Washington Post Columnist George Will: “…It probably would not be a one-time tax. The measure would lift California’s cap on taxes on intangible personal property, with no sunset or reinstatement provision.” (4/17/26)
Stanford University Economist David R. Henderson: “If you vote for a measure to tax the very wealthy, you might find yourself paying rates even above those meant for the very wealthy. Proposition 40 has the potential to become a stealth tax on all Californians.” (8/31/26)
George Mason University Mercatus Center Senior Research Fellow Veronique de Rugy: “…The measure includes a constitutional authorization to lift California’s cap on taxation of intangible personal property. Once that legal infrastructure exists, future wealth taxes can be imposed at any rate, at any threshold, at any time. It is, in other words, a permanent new power for the state.” (5/28/26)
Howard Jarvis Taxpayers Association President Jon Coupal and California Business Roundtable President Rob Lapsley: “When politicians create new powers to tax property, savings, investments, and accumulated assets, those powers never remain limited to a tiny handful of people forever. This is not a billionaire tax. It is an everyone tax.” (5/25/26)
UC Berkeley Economics Professor Alan Auerbach: “There is nothing in the proposition to keep the tax from being imposed again in the future, and recent history suggests it will be.” (10/22/26)
Pacific Research Institute Senior Fellow in Business and Economics Dr. Wayne Winegarden: “Wealth tax proponents promise that only billionaires will pay. But when investment falls, growth slows and one-time revenues disappear while higher spending continues, government faces pressure to find the next source of money. Today, it’s billionaires. Tomorrow, you could be next.” (10/9/26)
In recent weeks, the No on 40 coalition has fact-checked proponents’ claims Prop. 40: will solve California’s budget problems, is just a one-time tax, won’t impact California’s economy, is a major boost to education, lowers costs, improves care, and protects against more health insurance company profits, and will address California’s healthcare needs.