The Billionaire Tax Could Be Defeated by Two Other Tax Measures. Here’s How

Santa Barbara voters heading to the polls this November will face one of the strangest ballot puzzles California has produced in years: three competing tax measures where a majority "yes" vote on the headline measure might not be enough to make it law.

The measure at the center is Proposition 40, a one-time 5% tax on California residents with a net worth above $1 billion. But as the Santa Barbara Independent reported, republishing reporting by Kristen Hwang of CalMatters, recent polling from the Public Policy Institute of California shows slim majorities of likely voters supporting not just Prop. 40, but also Propositions 41 and 42 — two countermeasures funded largely by billionaires and designed specifically to cancel the wealth tax out.

"I don't think that people at this point realize they're direct countermeasures because there hasn't been much said about 41 and 42," Mark Baldassare, PPIC's polling director, told CalMatters.

How the Three Measures Interact

The mechanics are straightforward even if the politics aren't. If Prop. 40 captures more votes than both Prop. 41 and Prop. 42, the wealth tax takes effect and voids the countermeasures. But if either Prop. 41 or Prop. 42 outpolls Prop. 40, the billionaire tax does not take effect — regardless of whether it won majority support on its own.

Prop. 40 would levy the one-time 5% tax based on residency as of Jan. 1, 2026 — a date that had already passed when the measure qualified for the ballot. That means billionaires who left California afterward would still owe the tax. According to the measure's primary backer, SEIU-United Healthcare Workers West, the tax would raise roughly $100 billion, with most of the money directed to healthcare and a smaller portion to education. The union argues the revenue is needed to backfill federal healthcare cuts passed last year. Opponents, including conservatives who argue the Medi-Cal program has grown too expensive, contend new federal policies will help the state trim spending instead.

Prop. 41 takes a more procedural swipe. It would require new tax proposals passed after the start of this year to comply with the state's annual spending limit — a cap voters approved in 1979 at the height of anti-tax sentiment. Because Prop. 40 was not written to comply with that limit, it would automatically run afoul of the provision. Prop. 41 would also require the nonpartisan state auditor to review new tax proposals before they reach voters and identify potential spending cuts in the programs they would fund — with audit costs paid out of tax revenue if a measure passes, or by the state if it fails.

Prop. 42 is the blunter instrument. It would bar new taxes on personal property — businesses, investments, retirement accounts, trusts and art collections — precisely what Prop. 40 targets. It would also prohibit retroactive taxation, blocking the wealth tax's reach back to assets accumulated before the measure takes effect. Either provision alone would be enough to nullify Prop. 40 if the countermeasure wins more votes.

Megan Jones, a tax attorney with Holland and Knight, told CalMatters that Prop. 42 is "a more direct anti-wealth tax proposal," noting the Legislature has tried and failed to pass wealth taxes before. If Prop. 42 passes, she said, it could constrain future legislative attempts as well.

Follow the Money

The spending on the three-measure battle is staggering even by California standards.

Backers of Prop. 40 — primarily SEIU-UHW, with support from the California Democratic Party — have raised about $31 million, mostly from union funds.

The opposition is operating on a different financial plane. Google co-founder Sergey Brin and other billionaires have poured more than $56 million into the No on Prop. 40 committee through a political organization called Building a Better California, according to the CalMatters reporting. That same group is the primary financial backer of Props. 41 and 42, having raised $131 million to promote them. In total, the billionaire-backed effort has amassed more than $187 million to defeat the wealth tax.

The opposition coalition also includes Gov. Gavin Newsom, doctors' groups and clinics. Newsom argues the tax would not provide a long-term fix for California's budget problems and would push wealthy residents and businesses — whose income taxes the state depends on — out of California, ultimately shrinking revenue.

What It Means for Santa Barbara

For Santa Barbara County residents, the practical stakes are less about whether any local household would owe the tax — the $1 billion net worth threshold applies to a vanishingly small number of Californians — and more about what the measures signal for state services and the initiative process itself.

The healthcare funding at the heart of Prop. 40 flows through the same Medi-Cal and safety-net systems that serve thousands of Santa Barbara County residents, and local clinics have watched the state-federal funding fight closely. At the same time, the spectacle of dueling ballot measures funded by nine-figure campaigns has renewed debate about whether California's initiative system increasingly rewards whoever can spend the most to confuse the electorate.

Baldassare said backers of the billionaire tax will have a hard time overcoming voter confusion about the three competing measures — and with PPIC's polling showing slim majorities supporting all of them, confusion may be the decisive factor.

With ballots landing in mailboxes across the 805 in the coming weeks, Santa Barbara voters would do well to read the propositions together rather than one at a time. On this corner of the ballot, a vote for the billionaire tax and a vote against it may look nearly identical — and only the final vote count will settle which one actually becomes law.