Vote Alix

The short version, for those of you reading this in line at Trader Joe’s:

• Prop 40 (one-time tax on billionaires): YES
• Prop 41 (audits + a poison pill): NO
• Prop 42 (permanent ban on wealth taxes): NO

And the most important sentence in this entire post: your yes on 40 only counts if you also vote no on 41 and 42. Keep reading and I’ll explain why.

Let me get this out of the way: billionaires should not exist. There’s no good reason for that much wealth to sit with a handful of people whose main hobby is making sure their grandchildren’s grandchildren have personal yachts. Meanwhile, Medicaid, Medi-Cal, Head Start and food stamps, the parts of our safety net that keep people from dying, starving or living without dignity, are being gutted TODAY.

Exhibit A: Mark Zuckerberg commissioned a 7-foot statue of his wife “in the Roman tradition.” Bold choice, Zuck. The Roman Republic collapsed after a tiny elite hoarded the land and the wealth while everyone else got squeezed. Just saying.

So yes, I’m voting for the billionaire tax. I did change my mind a few times, though, because there are strong policy arguments on both sides. I’ll walk you through them. You also need to understand Props 41 and 42, because they were written by billionaires for one purpose: to kill Prop 40. I’m analyzing all three together, because they’re really one fight wearing three different outfits.

How the three fit together (pay attention, there will be a quiz)

Prop 40 is the billionaire tax. Props 41 and 42 are dressed up as “good government” measures, but their real job is to kill Prop 40, and they’ll tie the hands of voters on future taxes while they’re at it.

It’s possible (even likely) that all three will pass. When measures on the same subject conflict, the one with more yes votes wins. Props 41 and 42 each include a clause saying that conflicting measures are void if 41 or 42 gets more yes votes. So Prop 40 could win a majority and still never become law.

In plain English:

• 40 passes, and 41 and 42 get fewer yes votes than 40: the billionaire tax moves forward.
• 40 passes, but 41 gets more yes votes: 41 can override the conflicting parts of 40.
• 40 passes, but 42 gets more yes votes: Prop 40 is dead on arrival.
• 40 fails, and 41 and/or 42 pass: no billionaire tax, and 41 and 42 become law anyway.

People tend to overlook that last one. If Prop 40 loses, 41 and 42 have nothing left to poison, but they don’t go away. They become permanent parts of California law, so each one has to stand on its own merits. And in every scenario where they collide, the courts get the final word. Hello, years of litigation! Lawyers everywhere are already pricing their boats.

Prop 40: The One-Time Billionaire Tax

What it does: Prop 40 imposes a one-time 5% tax on the net worth of California residents worth more than $1 billion as of January 1, 2026. Not millionaires. Not your dentist. Not anyone you know, unless you know some very interesting people. Legit billionaires.

The tax covers almost everything a billionaire owns, anywhere in the world (minus their debts): stocks, family companies, intellectual property. It doesn’t include real estate, pensions, retirement accounts, or physical property (art, yachts, Burning Man art cars) held outside California. The tax is due in 2027, and billionaires who are feeling cash-poor (sad trombone) can spread their payments over five years, at additional cost. Ninety percent of the money goes to health care, and the rest goes mainly to education and food assistance.

Proponents say it will raise about $100 billion. The Legislative Analyst won’t go that far, but agrees it would bring in “tens of billions of dollars,” while warning that the number is unusually hard to predict. (It’s hard to count money when the people who own it pay armies of accountants to make it look smaller.)

Supporters: This is SEIU-United Healthcare West’s baby. Yes, the dialysis-ballot-measure people. I’ve spent three voter guides yelling at SEIU-UHW for clogging our ballots with revenge measures, and nobody is more surprised than I am to be on their side this time. The Yes on 40 / No on 41 & 42 committee has raised about $31.8 million, almost all of it from SEIU-UHW and its affiliates. Other supporters include the California Nurses Association, Teamsters California, the California Democratic Party, Rep. Ro Khanna, Sen. Bernie Sanders and Robert Reich. Six Nobel Prize-winning economists, including Joseph Stiglitz, Peter Diamond and Paul Krugman, signed a letter in support.

Their case is simple. Congress just cut Medicaid and other safety net programs while handing the wealthiest Americans another tax cut. Supporters say California should claw some of that money back from the people who got the tax cut, instead of cutting health care or raising taxes on everyone else. According to the official ballot argument, Prop 40 would hit only about 250 billionaires, and the money it raises will “replace the funding Trump and his billionaire donors took from working people.” Bernie Sanders says it could protect health care for 3 million Californians.

They also point out that billionaires play by different tax rules than the rest of us. Most of their wealth is unrealized gains: stock that has shot up in value but hasn’t been sold, so it’s never taxed as income. Instead of selling, they borrow against those assets at low interest rates and live off the loans. When they die, the gains get wiped clean for their heirs under federal tax law. Tax nerds call this “buy, borrow, die.” Meanwhile, your paycheck gets taxed every two weeks. Their fortunes can go untaxed for generations. A wealth tax is the only way to reach that money.

As for the criticism that a “one-time” tax doesn’t cut it, supporters say that’s the point. Prop 40 isn’t meant to permanently overhaul California’s tax system. It’s an emergency response to an emergency: a federal government that just yanked the rug out from under millions of people’s health care.

And they note that California is ground zero for extreme inequality. As the Nobel Prize-winning economists put it, “The explosive growth of the state’s billionaires over the past few decades has made it one of the most unequal places in America.” Their letter ends with this:

“As Californians head to the polls, their vote may well come to be seen as a turning point in the battle between democracy and oligarchy.”
Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman and Joseph Stiglitz

BOOM.

Opponents: This coalition is weird. It includes Governor Newsom (friend of billionaires), Xavier Becerra (aspiring friend of billionaires), the California Teachers Association (I’ll explain), Planned Parenthood Affiliates of California (huh?), the California Medical Association, the California Primary Care Association, the firefighters, the building trades and the California Chamber of Commerce. The San Francisco Democratic Party voted to oppose it, even though the state party supports it. And the money behind the opposition comes from (surprise!) billionaires: more than $84 million so far, much of it through Building a Better California, whose top donors are Google co-founder Sergey Brin and venture capitalist John Doerr.

Opponents’ arguments fall into three buckets.

Bucket #1: “The billionaires will leave!” Will Prop 40 drive the richest Californians out of the state, taking their income taxes with them? That’s Governor Newsom’s argument. The No campaign claims a $25 billion loss in tax revenue, citing a study by Stanford economists. The Legislative Analyst’s estimate is much smaller: probably less than $1 billion a year in lost income tax.

To be fair to the No side, a few of them did pack. Larry Page dropped $173 million on two waterfront mansions in Miami, and Sergey Brin and Peter Thiel reportedly moved their family investment operations out of state, all before the January 1 cutoff. Bon voyage, gentlemen. Enjoy August.

But not everyone is fleeing. Nvidia’s Jensen Huang, who would owe an estimated $8 billion, reportedly called paying it “a privilege.” Imagine that.

And billionaires are famous for avoiding taxes in the first place, so the threat of losing their tax dollars is a little rich (pun intended). Everyone says they’ll leave California if voters pass [insert measure here], and most of them never do. California is the place to be. Have you been to Austin in August?

Personally, if a few more billionaires do leave, I’ll help them pack. Fewer billionaires means fewer billionaire-funded ballot measures, which means a shorter voter guide, which means I get my Septembers back.

Bucket #2: “You can’t calculate this fairly.” Net worth is easy to measure when it’s all publicly traded stock. It’s much harder for a stake in a private company, which has no market price. Prop 40 solves this with a formula instead of an appraisal, and critics say the formula can produce absurd results. Most notably, it presumes a founder owns at least as much of their company as their share of the voting power. A founder with a small economic stake but a lot of votes could be taxed on far more than their shares are worth. The California Society of CPAs opposes Prop 40 on administrability alone, which is the most CPA reason imaginable to oppose something.

There’s also a timing issue. The tax applies to anyone who lived in California on January 1, 2026, ten months before anyone gets to vote on it, even if they’ve since moved away. Opponents call that retroactive, and it guarantees a court challenge. (See: lawyers, boats.)

Bucket #3: “We like taxing billionaires, just not like this.” This is the most interesting bucket, because it comes from people who are fine with taxing billionaires. They object to how this measure is built:

• It’s one-time money for ongoing costs. Health care bills don’t stop in 2027. Planned Parenthood, which lost about $300 million in federal funding, put it bluntly in its ballot argument: “Prop. 40 doesn’t help the need for stable healthcare funding. Prop. 40 makes it worse.” (Worse? Not sure I buy that, but OK.)
• It cuts out schools. Prop 40 routes its revenue around Prop 98, the constitutional guarantee that gives schools a share of new state revenue, and around the state spending limit. The No campaign says schools lose about $3 billion a year (their number, not the Legislative Analyst’s). As the Teachers Association’s president put it, “It intentionally goes around public education funding, it cuts it out of receiving resources.”
• The providers weren’t at the table. SEIU-UHW drafted the measure without the hospitals, clinics and doctors who actually deliver care. The Legislature keeps wide discretion over where the money goes, so there’s no guarantee it reaches patients.

Now you know why the teachers, Planned Parenthood and the doctors are on the same side as Sergey Brin. Politics makes strange bedfellows.

Prop 41: Audits and the State Spending Limit

What it does: Prop 41 bundles two very different things. The first is an audit requirement. When the sponsors of an initiative for a new special tax (like Prop 40) collect 25% of the signatures they need, the State Auditor reviews the programs that would get the money. If the measure qualifies, a summary of the audit goes in the voter guide, and if it passes, those programs get audited every four years.

The second is a constitutional change: California generally could no longer create a new tax whose revenue is exempt from the state spending limit. Prop 40 does exactly that. That’s the poison pill. If 41 gets more votes than 40, it guts the billionaire tax.

Supporters: The California Society of CPAs, the CalAsian Chamber of Commerce, the California Taxpayers Association, the California Chamber of Commerce and Reform California. And the money: nearly $60 million, almost all of it from Building a Better California (the billionaires). Supporters argue that voters should know whether programs actually work before approving new taxes to pay for them, and that new taxes shouldn’t be designed to dodge the voter-approved spending limit.

Opponents: SEIU-UHW, Bernie Sanders, the California Democratic Party and the rest of the Prop 40 coalition. They call the audit language a shell game that hides the real purpose, which is killing Prop 40. The Legislative Analyst says the net fiscal effect is unknown. Audits cost money (probably in the low millions a year, and growing), although they could theoretically turn up savings.

Prop 42: A Permanent Ban on Wealth Taxes

What it does: Prop 42 amends the state constitution to prohibit new state taxes on financial assets or other personal property. That covers stocks, investment accounts, business interests and intellectual property. It also limits retroactive taxes. The Legislative Analyst says explicitly that if 42 gets more yes votes than 40, Prop 40 is stopped from becoming law. No ambiguity there.

Supporters: This coalition is broader than 41’s. It includes California Professional Firefighters, the State Building and Construction Trades Council, the Peace Officers Research Association of California, AMVETS, Reform California, Building a Better California and Sergey Brin himself. The Yes campaign has reported more than $73 million, essentially all of it from the billionaires. Their pitch: California should tax income and transactions, not the mere fact that you saved or invested money you already paid income tax on, and people should be able to rely on the tax rules in place when they made their financial decisions.

Opponents: SEIU-UHW, Sanders and the California Democratic Party. They point out that no ordinary Californian faces a state wealth tax on their 401(k), so the retirement-savings pitch is a scare tactic. The Legislative Analyst says 42 would restrict California’s future tax options and could reduce future revenue, although it can’t estimate by how much.

What the polls say (Yikes!)

A September Public Policy Institute of California survey of 1,103 likely voters found:

• Prop 40: 52% yes, 46% no
• Prop 41: 51% yes, 44% no
• Prop 42: 54% yes, 43% no

Voters currently support all three at the same time. If those were the final results, Prop 40 would pass AND Prop 42 would pass with more yes votes, which would stop the billionaire tax from ever taking effect. Voters would approve a tax and a ban on that tax on the same day. You cannot make this stuff up.

Support for 40 has grown a bit since August, when Berkeley IGS had it at 48% yes, 41% no and 11% undecided. But all of these numbers are within shouting distance of the margin of error, and California tax measures historically lose support as Election Day approaches. So nobody should be popping champagne. Not even the billionaires, and they can afford the good stuff.

Mostly, those numbers tell me that voters are confused, and that nearly $120 million in countermeasure advertising is doing exactly what it was designed to do.

My take: YES, NO and NO

Yes on 40, because billionaires shouldn’t exist. Look, I’m a lawyer and a government nerd. I can see Prop 40’s flaws as well as anyone. Is it the wealth tax I would have drafted? No. Do I wish SEIU-UHW had sat down with the teachers and health care providers before filing it? Obviously. But nobody else is offering to make billionaires pay anything, and people need health care now, not after the next Democrat wins the White House and we also control both houses of Congress.

We’re talking about a one-time 5% tax on people worth more than a billion dollars. Take Warriors owner Joe Lacob, whom Forbes puts at about $2.3 billion. His bill would be roughly $115 million, leaving him with a measly $2.2 billion. He’ll be fine. He will still be sitting courtside at every game.

Together, it’s estimated that Brin and friends have spent over $200 million on these three measures. If they’re willing to spend that much to kill this thing, it clearly works. As Senator Sanders noted, “Instead of paying their fair share of taxes, billionaires are now spending $229 million — 0.01% of their wealth — to oppose a 5% tax on their wealth.” That tells you everything you need to know.

And think about what happens if Prop 40 fails. Every billionaire in America will point to California, the bluest state in the country, and say, “See? Even THEY don’t want to tax us.” That talking point will kill wealth tax proposals in statehouses from Olympia to Albany for a decade. But if it passes? California has a long history of going first and dragging the rest of the country along with it: auto emissions standards, the minimum wage, marriage equality. Other states would follow. Maybe someday even Congress would follow. (A girl can dream!)

At a moment when the federal government is cutting health care for working families to pay for tax cuts for the richest people on earth, California has a chance to send a very loud message: nobody makes a billion dollars alone. They got rich on the backs of the rest of us: the workers who built their products, the public roads and schools and research that made their companies possible, and the taxpayers who footed the bill while they paid a lower rate than their nannies. It’s time they paid their fair share. Let’s send that message together.

No on 41, and this is my softest no. I like the audit idea. Putting an independent auditor between an initiative sponsor’s sales pitch and your ballot is small-d democracy at its best: it doesn’t stop anyone from proposing anything, it just gives voters real information. But it’s very narrow. It only covers special taxes, so it wouldn’t have touched a single dialysis measure. (Grrrr.) We’d also pay for audits of initiatives that never even qualify. And the audit piece is chained to a permanent constitutional restriction that binds the Legislature and future voters, and exists mainly to kill Prop 40. If someone puts the audit provision on the ballot by itself, I’ll probably vote yes. This version comes with too much baggage.

No on 42, and this is my hardest no. Prop 42 is the one that outlives this entire fight. It permanently removes wealth taxes from California’s toolkit, for the Legislature AND for future voters. None of us knows what California’s finances will look like in 2040. If Prop 40 loses and 42 passes, whoever writes the next, smarter billionaire tax never gets a shot without amending the constitution first. Prop 42 isn’t protecting your 401(k). It’s protecting Sergey Brin’s grandchildren’s yachts, forever.

Did I mention I’m not a fan of California’s direct democracy process? Countermeasures designed to confuse voters into killing a measure they support are the ballot measure system at its most cynical. Look at those poll numbers again. The billionaires don’t need to win the argument on Prop 40. They just need Prop 42 to get more yes votes than 40 does.

So remember: your yes on 40 only counts if you ALSO vote no on 41 and 42. Voting yes on all three is exactly what they’re counting on.

YES on 40. NO on 41. NO on 42. Sergey, I’m coming for you, wherever you live these days.

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