Wealth Tax News – 11/13/2026

California voters rejected Prop 40, the proposed one-time 5% tax on billionaires, by about 53% to 47%. Commentators pointed to heavy opposition spending, splits among Democrats and fears that wealthy residents would leave the state. A separate measure keeping higher income taxes on high earners passed, which suggests voters might have resisted wealth taxes specifically rather than taxes on the rich in general.

Supporters, including Sen. Ron Wyden and Sen. Bernie Sanders, say they will keep pushing, both with a possible 2028 California measure and at the federal level. Those efforts face a likely veto from President Trump, unresolved constitutional questions and California’s Prop 42, a countermeasure headed toward passage that would ban new taxes on assets.

Please find summaries of relevant articles with web links below. Please reach out to any member of your Brownstein National Tax Policy Group team with questions or to set up a meeting.

Federal

Wyden undeterred by pending wealth-tax defeat in California – POLITICO
Senate Finance Committee Ranking Member Ron Wyden (D-OR) said California’s rejection of a wealth tax has not changed his push to tax unrealized capital gains annually for the ultra-wealthy. He emphasized that his proposal is not a wealth tax and has support from half of Senate Democrats.

California

Prop 40 is dead. A fight over what comes next is already brewing. – POLITICO
Following the defeat of Prop 40, SEIU-UHW President Dave Regan pledged to pursue another measure in 2028 if lawmakers do not identify new revenue sources.  California Medical Association CEO Dustin Corcoran is developing an alternative focused on restructuring the state’s income tax. Corcoran aims to build a broader coalition and direct revenue toward education and workforce development as well as health care. Regan’s allies argue that opponents have not offered a credible alternative to offset federal health care cuts. Future proposals could also face constraints from Prop 42, which would prohibit new taxes targeting assets and appears to be headed toward passage.

The Vote Against the Wealth Tax Was a Verdict on Inflation – WSJ
In an op-ed, Joseph Sternberg argues that California voters’ rejection of Prop 40 signals resistance to addressing fiscal pressures by taxing inflation-driven asset gains. He argues that inflation-indexed federal income tax brackets and the lack of a national consumption tax limit other ways for lawmakers to capture inflation-generated revenue, making wealth an attractive target. Sternberg notes that Prop 40’s defeat casts doubt on national support for a wealth tax and leaves policymakers facing politically difficult spending cuts or higher taxes on productive activity, particularly labor.

California Defeats Prop. 40, but Wealth Taxes Shamble On – WSJ
In an opinion column, Matthew Hennessey criticizes wealth-tax supporters for continuing their push after Prop 40 failed. He highlights economists Emmanuel Saez and Gabriel Zucman’s continued advocacy and Sen. Bernie Sanders’s (I-VT) pledge to pursue a federal billionaire wealth tax. Hennessey argues that such taxes would drive wealthy residents—and their tax revenue—to other states. He described the continued campaign as a refusal to accept voters’ rejection of the policy.

Failure of California Billionaire Tax Strikes Blow to Progressive Agenda – The New York Times
In a New York Times analysis, Andrew Duehren describes how Prop 40’s failure was a significant setback for progressives and challenged assumptions that narrowly targeted the ultrawealthy would secure voter support. Democratic divisions, billionaire-funded opposition and concerns about wealthy residents leaving the state contributed to the defeat. However, voters’ approval of a separate measure maintaining higher income taxes on high earners suggests the result may reflect resistance to wealth taxes specifically, rather than taxing the rich generally. The outcome could steer Democrats toward more traditional revenue options, including higher individual and corporate income taxes or changes to estate taxes.

Why did California’s billionaire tax fail to surf the blue wave? – NPR
In an analysis, Greg Rosalsky examines competing reasons for Prop 40’s failure. Gabriel Zucman blames overwhelmingly greater opposition spending. Economist Joshua Rauh argues that weak support in progressive Bay Area counties reflects concerns about the tax’s economic consequences. The measure also divided traditional Democratic allies because it earmarked 90% of revenue for health care and offered only one-time funding. Opponents questioned imposing the tax at the state rather than federal level. Both economists expect continued wealth-tax proposals, but federal efforts face political obstacles and unresolved constitutional questions.

Gavin Newsom won the argument on California’s proposed wealth tax. He could still face a fight over it – CNN
California’s rejection of Prop 40 affirmed Gov. Gavin Newsom’s (D) opposition but could create political vulnerabilities in a potential 2028 presidential bid. Rep. Ro Khanna (D), another potential contender, and other proponents blame Newsom for helping defeat the proposal, which they estimated would raise $100 billion primarily to offset federal health care cuts. Gov. Newsom argued that a state-level tax would drive billionaires, and tax revenue, elsewhere, while supporting a national minimum tax on billionaires.

Progressives Lose California Wealth Tax Battle—but Aren’t Conceding the War – WSJ
Progressives plan to continue pursuing wealth taxes despite Prop 40’s failure, citing Democratic election gains and the measure’s relatively narrow defeat despite heavy opposition spending. California advocates are considering a broader coalition and a lower-rate annual tax for 2028. Congressional Democrats are promoting proposals such as Sen. Wyden’s annual tax on billionaires’ unrealized capital gains. Those efforts face significant obstacles, including President Trump’s likely veto of federal legislation, unresolved constitutional questions and a potential California prohibition on wealth taxes.

Billionaire tax Prop. 40 was officially rejected in California – Los Angeles Times
California voters rejected Prop 40’s over concerns that it would drive wealthy residents out of the state and undermine the economy and tax base. More than $400 million was spent across three related ballot campaigns, with over 90% devoted to opposing the wealth tax. Prominent Democrats and allied organizations split over the proposal. Supporters had sought to raise $100 billion primarily to offset federal health care cuts and vowed to pursue another measure in 2028 if lawmakers do not address the funding gap.