California's Proposition 40, a ballot measure that would have imposed a one-time 5% levy on the net worth of Californians worth over $1 billion, faces likely defeat as of November 5, 2026 [1]. With 56% of voters voting "no" and 44% voting "yes," the measure fell short of the majority required for approval [1]. The Service Employees International Union-United Healthcare Workers West, which sponsored the billionaire tax proposal, conceded near-certain defeat and indicated plans to attempt passage again in 2028 unless the state legislature takes action [1].
The defeat of California's billionaire tax is expected to energize Democratic lawmakers in Congress to pursue federal tax increases on high earners [1]. With Democrats set to control both the House and the Senate, tax experts anticipate "a flurry of new tax proposals aimed at raising taxes on high earners" that would be offset by tax cuts for middle- and lower-income taxpayers [1]. According to Howard Gleckman, nonresident fellow at the Tax Policy Center, "It is clear Democrats will try to lower taxes for middle-income households and raise taxes on certain businesses and high-income households" [1]. Potential federal proposals could include plans similar to those previously floated by Senators Chris Van Hollen (D-Md) and Cory Booker (D-N.J.), which call for graduated surtaxes on high earners, starting with a 5% surtax on those making $1-$2 million and rising to 12% for higher earners [1].
While California's billionaire tax failed, other state-level tax measures targeting the wealthy showed stronger support [1]. Washington State voters approved a new "millionaire tax" imposing a 9.9% tax rate on household income exceeding $1 million annually, and Colorado's passage of a plan to replace its 4.4% flat tax with a graduated income tax featuring an 8.4% top rate on income over $1 million remained too close to call [1]. Tax experts also note that plans for a federal wealth tax or tax on unrealized gains could receive increased attention in the new congressional session [1].
CONCLUSION
California's defeat of its billionaire tax is likely to shift focus toward federal-level tax increases on high earners, with Democratic control of Congress expected to drive proposals for graduated surtaxes and potential wealth taxes in the coming months. While state-level measures showed mixed results, the momentum suggests renewed efforts to raise taxes on the wealthy at both state and federal levels, though implementation details remain uncertain.