California’s Proposition 40, which would impose a one-time wealth tax on billionaires, has grown from a state tax debate into a national discussion about wealth distribution and the future of the US tax system. Six Nobel Prize-winning economists have endorsed the measure, arguing that if California—home to many of the country’s technology billionaires—acts first, other states, the federal government and even other countries could follow.
Proposition 40 would impose a one-time tax equal to 5% of the assets of California residents with net worth above $1 billion. The open letter was signed by Daron Acemoglu, Abhijit Banerjee, Peter Diamond, Esther Duflo, Paul Krugman and Joseph Stiglitz. The economists have previously supported wealth taxes or called for higher income taxes on the ultra-wealthy.
250 Billionaires Hold $2.3 Trillion
The six economists wrote that the number of billionaires in California, and the wealth they control, has risen sharply over the past several decades, making the state one of the most unequal in the US. They estimate that roughly 250 California billionaires collectively hold $2.3 trillion. Between 2019 and 2025, their combined wealth rose by about $1.4 trillion, while the state income tax they paid amounted to 1.6% of that increase.
The letter argues that wealthy individuals have made important contributions to the economy and society, but that their fortunes have already generated substantial rewards. Some capital gains can be deferred or avoid taxation through existing tax structures, allowing assets to continue accumulating. With SpaceX going public in June, Anthropic planning an initial public offering later this year and OpenAI potentially listing next year, California’s billionaire population could continue to grow.
Supporters Project $100 Billion in Revenue
The Western Healthcare Workers division of the Service Employees International Union, which is campaigning for Proposition 40, says the wealth tax could raise $100 billion. Supporters want the funds to offset federal cuts to healthcare spending. They also argue that California’s richest residents would remain among the world’s wealthiest even after paying the tax.
Opponents warn that the measure could weaken economic growth and startup financing. They say technology founders might be forced to sell large portions of their company holdings to meet the tax bill. A central issue is that much of many founders’ wealth is held in private-company equity rather than cash or other highly liquid assets. Some supporters of the proposal have also argued that illiquid holdings and founders’ voting rights should not be taxed in the same way.
California’s business and labor communities are divided as well. Nvidia Chief Executive Jensen Huang said he was “completely fine” with the tax. Google co-founder Sergey Brin, by contrast, donated more than $100 million to groups opposing a billionaire tax. Some unions also oppose the measure, saying the state should prioritize other spending commitments.
Venture Capital Flows Cited by Supporters
The economists’ letter also challenges claims that a wealth tax would drive capital and talent out of Silicon Valley. They point to data showing that California has attracted 80% of new US venture capital funding since the beginning of 2026, compared with about 50% before 2025. Supporters cite the figures as evidence that the tax debate has not yet visibly altered California’s position in the US startup-financing market.
Opponents remain concerned that the tax would not stay a one-time measure and could become a longer-term policy framework. The letter argues that if California voters choose to tax the wealth of some of the most influential billionaires in the US, the decision could encourage similar measures in other states, at the federal level and in other countries.
Support and Opposition Close Ahead of November Vote
California voters have not reached an overwhelming consensus. A recent poll by the Public Policy Institute found that 52% of likely voters supported Proposition 40, while 46% opposed it, a margin of just six percentage points.
Two other measures that could weaken or eliminate the effect of Proposition 40 also drew majority support. Proposition 41 would require any new taxes to remain within the state’s existing spending limits; 51% of those surveyed supported it and 44% opposed it. Proposition 42 would prohibit taxes on financial assets and personal property other than real estate, with 54% supporting the measure and 43% opposed.
As a result, even if Proposition 40 passes in November, its implementation could still be affected by the related measures. Mark Baldassare, who oversees the polling, said supporters of Proposition 40 still need to persuade more voters and that the outcome may not become clear until the final stage of the campaign.