California voters reject billionaire tax proposal in early projections

California voters have rejected a proposed one-time tax on billionaires, according to early projections in the state's midterm election vote. With about 60% of ballots counted, the measure known as Proposition 40 was trailing by a clear margin, with the "no" side on 55.6% and the "yes" side on 44.4%. The proposal would have imposed a 5% levy on Californians with net worth above $1bn.

The measure was designed to raise about $100bn, with most of the money earmarked for healthcare programmes. Education and food assistance would also have received funding under the plan. Supporters presented it as a response to economic inequality and as a model that could be copied elsewhere in the United States.

The proposal was backed by Senator Bernie Sanders and other progressive figures, while Democrats argued it was needed to help offset federal funding cuts in President Donald Trump's One Big Beautiful Bill. Outgoing California Governor Gavin Newsom opposed the measure, warning that it could push ultra-wealthy residents and high-tech entrepreneurs out of the state. Opponents also argued that such a tax could threaten income-tax revenue and jobs.

The campaign became a major test of how far California Democrats were willing to go on taxing the wealthy. It also exposed divisions among party leaders and labour unions, which helped weaken support before voting day. Billionaires in the state, including Google co-founder Sergey Brin, spent more than a quarter of a billion dollars opposing the proposal.

The result is a setback for the Democratic Party's left wing, even as the party made gains in the wider midterm elections. It also leaves open the broader debate over how to fund healthcare and other public services without driving away high earners and investment. For supporters, the vote was meant to show that the richest residents should contribute more to public programmes.

What remains unclear is how the final certified count will compare with the early projections and whether the result will influence similar tax proposals elsewhere. The vote also raises questions about how California Democrats will balance progressive fiscal policy with concerns about business migration and revenue loss. The issue is likely to remain part of the party's national debate as leaders look ahead to future elections.

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