California Proposition 40 Billionaire Tax: Markets Price a 26.5% Pass as Polls Turn Against It
On Tuesday, November 3, California voters will decide the most expensive question on any American ballot this year: whether the state's billionaires should pay a one-time tax of up to 5 percent of their net worth. It is Proposition 40, the 2026 Billionaire Tax Act, and three days before the vote the two ways of reading its chances point in different directions. The polls say it is losing, but not by much. The prediction markets say it is losing by a lot. I think the truth sits between them, and closer to the markets than the polls suggest.
Start with what the measure would actually do, because the design is part of the fight. Under Proposition 40, a Californian who was a resident on January 1, 2026, and whose net worth on December 31, 2026, is $1 billion or more would owe a one-time state tax, phasing in to the full 5 percent at $1.1 billion. A married couple counts as one taxpayer, worldwide assets count, and directly held real estate, pensions and most retirement accounts are generally excluded. The tax would be due in 2027, with an option to spread payment over five years at a higher total cost. Ninety percent of the revenue must go to health care, and the rest to education, food assistance and administration. The state's independent Legislative Analyst estimates tens of billions of dollars over several years; supporters put the figure near $100 billion over five years. The measure was sponsored by SEIU-United Healthcare Workers West, a health care union that framed it as a way to offset federal Medicaid cuts.
That sponsorship explains the strangest coalition in this campaign: supporters include the California Nurses Association, Senator Bernie Sanders and Representative Ro Khanna, while opponents include Governor Gavin Newsom, the California Teachers Association, and both candidates for governor, Xavier Becerra and Steve Hilton. The money gap is wider still: opponents have contributed nearly $368 million, according to Los Angeles Times figures cited in late-October reporting, against about $36 million for supporters, roughly ten to one.
The polls show that campaign working, but not finished. In September, the Public Policy Institute of California found 52 percent of likely voters in support; its October 16-22 survey found support down to 46 percent, with 52 percent opposed. A University of California, Berkeley Institute of Governmental Studies poll conducted October 19-25 found 42 percent in support and 50 percent opposed, down from 45 percent support in mid-September. Proposition 40 has lost its lead in both of California's most watched polls, but in neither has the opposition run away with it: the Yes vote sits in the low-to-mid forties, behind, not buried.
| Poll | Fieldwork | Yes | No | Undecided |
|---|---|---|---|---|
| Public Policy Institute of California | October 16-22 | 46% | 52% | 2% |
| UC Berkeley Institute of Governmental Studies | October 19-25 | 42% | 50% | 8% |
The markets are colder. On Polymarket, the question "Billionaire one-time wealth tax passes in California election 2026?" traded at 26.5 percent on October 31, on $4.5 million in total volume, after standing at 21.5 percent on October 30. I would not over-read a one-day, five-point move. The more durable signal is the level: traders price roughly a one-in-four chance, well below the 42 to 46 percent headline support in the polls. Part of the gap is mechanical. A poll's Yes share is not a win probability: to win, Proposition 40 must climb past 50 percent of votes actually cast, which means converting nearly all of the undecided voters and then some, against an opposition that has outspent it ten to one and is still spending.
Part of the gap is also structural. Propositions 41 and 42 are competing measures on the same ballot, and each could void Proposition 40 if it also passes and receives more Yes votes: Proposition 41 would impose audits and spending-limit rules on new special taxes, and Proposition 42 would prohibit new taxes on the ownership of personal property, including financial assets. In the Berkeley poll both stood behind, at 38 and 43 percent, so the trap may never spring. But winning a majority may not be the same as becoming law, and any honest account of this race has to say so plainly.
My own number is 30 percent for a Yes win, a little above the market's 26.5 percent, for a narrow reason: my prediction is defined purely as winning a majority of votes on November 3, while the market price may also discount the chance that Propositions 41 or 42 void the result afterwards. I do not go higher, because both latest polls put Yes behind, support has fallen in both since September, and the spending gap still favours the opposition. If Proposition 40 wins, it will be because late-deciding voters broke heavily for it. If it loses, as I lean, the margin will matter: a narrow loss keeps the idea alive for another cycle, while a loss by ten points or more would suggest that even California will not tax wealth itself when the question is put to a vote. That is why this measure matters beyond California: it is the cleanest test yet of whether a wealth tax can win at the ballot box, and on Tuesday we will have an answer.