California voters are set to decide whether to approve Proposition 40, a one-time 5% tax on the net worth of approximately 250 billionaires living in the state. Supporters describe the measure as a way to reduce inequality and generate substantial funding for healthcare services affected by federal cuts.

George Zimmer, a California multimillionaire and founder of Generation Tux, argues that wealthy residents have little reason to oppose the proposal. In his view, a 5% payment would not materially alter the lives of people well below the billionaire threshold, making it difficult to justify resistance from those with substantially greater resources.

Organizers estimate that Proposition 40 could raise roughly $100 billion. Most of that money would be directed to healthcare, including efforts to offset federal reductions linked to the 2025 tax bill. Six Nobel Prize-winning economists have said the measure could encourage similar taxes on ultra-wealthy individuals in other states and eventually at the federal and international levels.

The main argument from opponents is that billionaires would move to states with lower taxes, weakening California’s tax base and damaging its reputation as a center for innovation. Zimmer disputes that prediction, citing studies that he says have not found evidence of wealthy people leaving in large numbers after tax increases.

He points to Massachusetts and Washington State, where the millionaire populations increased after higher taxes on top earners were introduced in 2022. A 2023 study also found that California had the second-lowest out-migration rate among households earning more than $200,000 since 2011, despite its relatively high tax levels.

According to Zimmer, billionaires seeking to avoid the proposed tax would have needed to leave California by 1 January 2026, but only six had done so by that point. He also states that the wealth of California’s billionaires grew by an average of 15% annually between 2019 and 2025, while their state income-tax payments represented just 0.26% of that wealth.

He argues that even if all of the state’s billionaires left, the lost tax payments would take 25 years under current California law to exceed the estimated $100 billion that Proposition 40 would generate.

Zimmer also rejects the idea that the proposal would undermine innovation. He maintains that a one-time tax would not discourage entrepreneurs from pursuing opportunities in established business hubs. He cites venture capital figures showing that California received at least 80% of new venture capital funding in 2026 amid the debate over the measure.

For supporters, Proposition 40 would make California’s tax system more progressive, limit the influence of its wealthiest residents and provide funds intended to prevent hospital closures, healthcare coverage losses and cuts to healthcare jobs.

Sources: The Guardian Business.