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“The most important issue in this country”: Bernie Sanders promotes Prop 40 in Los Angeles. Photo: IMAGO/Amanda Villegas A one-time tax on the net assets of billionaires is intended to restore the ailing health care system in California. This is a referendum that California voters will vote on in the midterms on November 3rd. It is the "most important referendum" of these midterms because it affects "the most important issue in this country": the democratic socialist Bernie Sanders emphasized this at campaign events for which he flew to California at the beginning of October.

The referendum, called Proposition 40, or Prop 40 for short, proposes a one-time tax of five percent on the net worth of billionaires who reside in California. The “California Billionaire Tax Act” covers assets such as stocks, bonds, company investments, works of art, collections and intellectual property. Real estate, pension rights and retirement savings accounts are excluded.

Proponents are optimistically anticipating revenue of around $100 billion. Government estimates are more cautious, assuming a double-digit billion figure in the upper range. Around 250 individuals would be affected, including well-known tech bosses such as Peter Thiel, Sergey Brin and Mark Zuckerberg. For example, the latter would have to transfer $10 billion of his net assets to the state of California. The ultra-rich would by no means starve, Bernie Sanders also pointed this out. Prop 40 would barely touch the system that makes obscene wealth inequality possible. But the ailing health care system in California could be partially renovated with the one-time wealth tax of five percent.

The SEIU-UHW union, the largest union in the California healthcare sector, is behind the initiative. Their argument: Without additional income, there is a risk of hospital closures, especially in rural areas. For many people, health insurance coverage is also at risk. The independent Kaiser Family Foundation estimates that up to 1.6 million people in California could lose their coverage through Medi-Cal, California's health insurance for low earners. Fund contributions threaten to increase by 10 percent. In addition, according to the University of California, the number of jobs in the healthcare sector at risk is estimated at up to 145,000.

Google co-founder Sergey Brin alone is spending $100 million on the counter-campaign.

The background to the health care crisis, which extends far beyond California, is a law passed by the US Congress and signed by Donald Trump in July 2025 with the Orwellian name “One Big Beautiful Bill”. It combines tax giveaways for the rich and increased spending on armaments in the military and police with tough cuts in social services. The healthcare system in California is therefore missing around $30 billion annually.

But the misery didn't start with Trump and his Republicans. The unequal distribution of wealth on these Californian scales goes way back, as a study by economists Gabriel Zucman and Emmanuel Saez from the University of California shows. The wealth of California's billionaires has multiplied to $2.3 trillion between 1982 and 2026. That's 38 times more. In contrast, the inflation-adjusted income of an average California family was far lower during the same period. It just doubled.

It is not surprising that the resistance to Prop 40 is led by the class-conscious billionaire caste. It is supported by the Republicans, start-up investors and business associations. Google co-founder Sergey Brin alone is spending $100 million on the counter-campaign. According to recent reports, opponents of the referendum have raised an unprecedented $350 million, while supporters have raised only a tenth of that. The capitalist class spends more than a million dollars a day on television commercials, digital ads and direct mail. It “warns” about capital flight, price increases and mass unemployment. Prop 40, if it receives a majority, would encourage billionaires to leave California, they say, resulting in lost jobs, investment and tax revenue.

What is surprising at first glance, however, is that important voices against the wealth tax proposal have also been heard among the Democrats and in the unions. The leadership of the California Democrats and the trade union umbrella organization California Federation of Labor Unions with its 2.3 million members support him, as does the Democratic Socialists of America (DSA). But Gov. Gavin Newsom and other prominent Democrats are fighting him with much the same arguments as the right-wing tech bros. The California Teachers Association and construction unions oppose it, among other things because Prop 40 would lead to “one-sided favoring of the health sector at the expense of other sectors.”

Governor Newsom tried months ago to let the referendum come to nothing. Although he fundamentally supports the idea of ​​a US-wide billionaire tax, he believes that California going it alone would be risky. Taxes would be detrimental to the world's fourth-largest economy, he claims. But everyone knows the unspoken secret: Newsom has his sights set on running for president in 2028 and doesn't want to mess with the supposed center.

Polls recently showed a slight lead for the supporters of Prop 40, but also a significant proportion of undecided people. Success could encourage progressives to pursue similar initiatives in other states and push harder for a federal wealth tax. Failure would worsen the social misery in California and give opponents arguments that taxing large fortunes is politically unfeasible or economically too risky.

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