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California’s billionaire tax faces defeat, but Democrats plan higher taxes on the wealthy
California’s proposed one-off tax on billionaires appears likely to fail, even as voters in some other states back higher income taxes on high earners. Tax experts say the result could strengthen Democrats’ efforts to raise federal taxes on wealthy households and businesses, while lowering taxes for middle- and lower-income people.
With 56% of California voters opposing Proposition 40 and 44% supporting it, the measure is short of the majority needed to pass. It would have taxed the net worth of Californians worth more than $1 billion at 5% once; two opposing measures are also leading. The sponsoring healthcare union said it may try again in 2028. Washington voters supported a 9.9% tax on household income above $1 million, while Colorado’s proposed graduated tax, with a top rate of 8.4% above $1 million, remained too close to call. One federal proposal would add a surtax of up to 12% on incomes above $5 million and raise the top capital gains rate from 23.8% to 35.8%.
In short
- California’s proposed 5% billionaire tax is likely to lose.
- Washington backed a 9.9% tax on income above $1 million.
- Democrats may pursue federal tax hikes on high earners.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Supporters argue that asking billionaires and other very high earners to contribute more could help fund healthcare and public services while easing the tax burden on middle- and lower-income households. They see higher taxes on large fortunes and incomes as a way to address inequality and ensure that those who have benefited most from the economy contribute fairly.
The case against
Opponents argue that steep or one-off taxes on wealth and high incomes could discourage investment, encourage wealthy residents to move or shift assets, and make tax revenues less reliable. They may also view such taxes as unfair to people whose wealth is tied up in businesses or assets, and prefer to fund services through broader or more stable revenue sources.