California Voters Appear Set to Reject DSA-Backed Billionaire Tax

California's one-time 5% tax on billionaires was on the path to defeat Wednesday, according to the secretary of state's results as reported by Fox News, after Gov. Gavin Newsom and much of organized labor came out against it.

Proposition 40, backed by the Democratic Socialists of America, would hit roughly 250 Californians who together hold about $2 trillion in assets, including businesses, securities, art, collectibles and intellectual property. It would apply retroactively to billionaires who were state residents on Jan. 1, 2026, a design meant to stop them from leaving.

Supporters pitched it as a fix for a projected shortfall of up to $100 billion in federal Medi-Cal funding, with 90% of revenue going to health care. Newsom wasn't buying it. "I don't think it's a good idea to do [it] at a state level," he said, calling it "a badly written initiative" that addresses only one part of the budget. He noted opposition from firefighters, teachers, Planned Parenthood and most of organized labor.

Newsom urged a yes vote on Proposition 42, which would bar new state taxes on personal property and restrict certain retroactive taxes. Fox reported it was on track to pass. He left the door open to a federal version, saying that is "very different."

Richard Stern, an economist at Advancing American Freedom, said the wealth at stake is mostly not cash. "There's no cash," he said, describing factories, warehouses, delivery trucks and machinery. Taxing it, he argued, means "taking the means of production" from business builders and handing it to politicians: "That's socialism."

Results were not final as of the report.