California’s high-stakes, controversial billionaire wealth tax proposal is defeated. Statewide, voters are rejecting Proposition 40 by a 55% to 45% margin. The outcome delivers a major victory to Silicon Valley’s wealthiest residents, including Sergey Brin, and business interests, who poured hundreds of millions of dollars into stopping the measure – even as voters in two of the state’s biggest cities backed it.
Silicon Valley splits over the 5% tax
Prop 40 sought to impose a one-time 5% tax on the assets of roughly 200 California billionaires. Backed primarily by the state’s powerful healthcare workers’ union, the measure was designed to raise money for healthcare and help offset Medi-Cal cuts for low-income residents. In the heart of Silicon Valley, voters overwhelmingly sided against it. Santa Clara County, home to tech hubs like Sunnyvale, Palo Alto, Cupertino and Mountain View, mirrored the state’s 55% “no” to 45% “yes” split. Wealthy Bay Area neighbours in Marin County to the north and San Mateo County to the south also voted it down.Yet the results revealed a striking divide inside California’s tech and AI corridors. In San Francisco County, 55% of voters backed Prop 40 while 45% opposed it. That support came despite the city serving as headquarters for major AI startups like OpenAI and Anthropic, both of which are preparing to go public and mint a fresh wave of millionaires and billionaires.Meanwhile, Los Angeles County also voted in favour of Prop 40, passing it 53% to 47%. Unlike Northern California’s tech-driven economy, Southern California’s entertainment industry largely views AI-generated content as a threat rather than a windfall.
Sergey Brin’s $102 million push and a competing ban
No single person spent more to defeat the wealth tax than Google co-founder Sergey Brin, who contributed $102 million to the campaign. Overall, billionaire opponents and business groups spent $316.7 million to fight Prop 40.To make sure the tax couldn’t sneak through, opponents also placed two competing countermeasures on the ballot: Propositions 41 and 42. One of them, Prop 42, is currently leading in the vote count. By prohibiting taxes on personal savings, assets, and retirement holdings, Prop 42 would effectively ban wealth taxes in California altogether.While Brin and his fellow California billionaires appear to have won this round at the state level, the broader fight over taxing the ultra-wealthy isn’t over. Now Democrats control Congress in Washington, and lawmakers are picking up efforts to make billionaires pay more taxes, which could mean more pressure on rich Americans at the federal level.