California’s bitterly contested billionaire tax appeared to be heading for defeat Tuesday night after a vicious campaign that split Democrats, sent Silicon Valley tycoons scrambling to leave the state and sparked a $330 million-plus war to kill the proposal.
Proposition 40, which would slap a one-time 5% tax on billionaires’ wealth, was trailing by 56% to 44% with roughly half the ballots counted shortly after 9 p.m.
The measure was among the most fiercely contested of the 14 propositions on California’s ballot, pitting powerful labor unions and lefty Democrats against some of the world’s richest tech entrepreneurs.
Google co-founder Sergey Brin emerged as the biggest name in the billionaire backlash, pouring more than $100 million into efforts to defeat the tax.
The Soviet-born tech titan even invoked his family’s escape from communism in a rare public statement attacking the proposal.
“I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don’t want California to end up in the same place,” Brin said.
Brin helped bankroll Building a Better California, the political committee behind two rival ballot measures designed to kill the billionaire tax even if voters approved it.
Proposition 41 would tighten rules on certain new state taxes and require audits of programs they fund, while Proposition 42 would prohibit new state taxes on personal property, including financial assets, and certain retroactive taxes.
Either measure could invalidate Prop. 40 if approved with more votes than the billionaire tax.
Shortly after 9 p.m., Prop. 41 was narrowly trailing, while Prop. 42 was ahead by nine points and had attracted more “yes” votes than the billionaire tax.
The tax battle also exposed deep divisions within California’s Democratic establishment.
Gov. Gavin Newsom and Democratic gubernatorial candidate Xavier Becerra opposed the proposal, warning it could drive wealthy entrepreneurs, their businesses and jobs out of California, dealing a devastating blow to the state’s economy.
But the California Democratic Party defied its leaders and endorsed the measure at its convention in San Diego in August.
Vermont Sen. Bernie Sanders also threw his weight behind the tax, traveling to California to campaign for it.
Supporters claimed the measure could raise $100 billion, with 90% earmarked for health care and the remainder for education and food assistance.
However, California’s nonpartisan Legislative Analyst’s Office estimated it would generate tens of billions of dollars over several years, rather than endorsing the campaign’s $100 billion projection.
The controversial tax was spearheaded by Dave Regan, president of SEIU United Healthcare Workers West, who has faced allegations of strong-arming fellow labor leaders into backing the proposal and threatening and intimidating female union officials.
Regan has also been accused of physically assaulting a former SEIU executive in 2009.
The union spent more than $20 million helping put the measure on the ballot, while the campaign subsequently raised roughly $33 million to fight for its passage.
Flanked by labor allies and Democratic Rep. Ro Khanna on Tuesday, Regan blamed billionaires for the opposition campaign and insisted the tax was needed to help plug holes left by federal health care funding cuts.
“Whatever happens tonight, the reality is … somehow lost in the flood of advertising over the last few weeks, is the reality that since the One Big Beautiful Bill passed, 1.8 million Californians have lost their health insurance,” Regan vented.
Meanwhile, several Silicon Valley billionaires had already taken steps to distance themselves from California as the tax battle intensified.
Among them were Minecraft creator Markus “Notch” Persson, Palantir co-founder Peter Thiel and former Uber CEO Travis Kalanick.
Meta founder Mark Zuckerberg was also reported to have explored establishing residency outside the state amid concerns over the proposed tax.
The extraordinary battle turned California into a national testing ground for a wealth tax long championed by progressives across the U.S. and its success could potentially see a rollout elsewhere.
