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Perhaps the most revealing results of the election came from two propositions that, at least superficially, asked voters to do something similar: Tax wealthy Californians to support important public services.
Proposition 3 passed comfortably, with approximately 59% support. Proposition 40, the proposed billionaire wealth tax, is headed in the opposite direction, with only about 45% voting yes.
It's tempting to interpret this as an ideological contradiction. It isn't.
Proposition 3 offered voters something familiar. It made permanent an existing income tax on high earners that Californians first approved in 2012 and renewed in 2016. The tax was scheduled to expire in 2031 and generates an estimated $5 billion to $15 billion annually. Its revenues support public education, while also freeing up room in the state's main operating budget, the General Fund, for healthcare and other services.
Importantly, it didn't ask voters to accept a new system of taxation. It asked whether they wanted to continue one they'd already lived with for more than a decade.
Proposition 40 was an entirely different proposition. It would have imposed a one-time tax of up to 5% on the covered assets of billionaires, with 90% of the revenue dedicated to healthcare and 10% to food assistance or education-related programs. Supporters argued it was necessary to offset looming federal healthcare cuts. Opponents warned that it would drive wealthy taxpayers out of California, further destabilizing state revenues.
The campaign exposed three important differences between the measures.
First, Proposition 3 had a coalition. Proposition 40 had a constituency.
The California Teachers Association spent years assembling a broad alliance behind Proposition 3, including educators, public employees, firefighters, and other labor organizations. The campaign conducted extensive polling, tested its messaging, and deployed teachers to knock on hundreds of thousands of doors.
Proposition 40's sponsor, SEIU-United Healthcare Workers West (SEIU-UHW), took a markedly different approach, building the measure around its own priorities rather than a coalition's. By directing nearly all of the proposed revenue toward healthcare, the union alienated potential allies, including educators worried about bypassing Proposition 98, the constitutional guarantee that sets minimum funding for K-14 schools.
That division proved enormously consequential. Governor Newsom, CTA, Planned Parenthood, and several other influential Democratic organizations opposed the wealth tax, even as the California Democratic Party, California Labor Federation, Bernie Sanders, and Ro Khanna supported it.
A landmark progressive tax increase is much harder to pass when the progressive coalition has been divided before the campaign even begins.
Second, the opposition to Proposition 40 had hundreds of millions of dollars to work with. Proposition 3 had virtually no organized opposition.
The billionaire tax generated one of the most expensive ballot measure campaigns in California history. Opponents spent more than $300 million fighting it, while the Proposition 40 campaign spent much of its money just qualifying the measure for the ballot.
The spending imbalance was extraordinary, but the effectiveness of the messaging may have mattered just as much.
Rather than put Silicon Valley billionaires in front of television cameras to defend their fortunes, opponents enlisted teachers, firefighters, and other trusted messengers to argue that the proposal could eventually affect ordinary Californians.
A particularly effective line of attack focused on provisions allowing the Legislature, with a two-thirds vote, to make changes to the tax. Opponents argued this could open the door to future taxes on retirement savings and other assets. As one campaign consultant put it at Thursday's post-mortem, explaining why that provision was so damaging: “When you're running a yes campaign, the only people that voters hate more than billionaires are probably legislators.”
Third, voters distinguished between taxing income and taxing assets.
This may be the most important policy lesson.
Polling consistently showed broad support for raising taxes on wealthy Californians. Yet support for Proposition 40 deteriorated once voters confronted the actual mechanics of a new wealth tax.
At Thursday's polling discussion, Mark DiCamillo of Berkeley IGS noted that white voters, men, older voters, and higher-income voters were more likely to support Proposition 3 while opposing Proposition 40.
The distinction makes sense. Continuing an existing tax on high incomes is one thing. Establishing an entirely new tax on assets, along with questions about valuations, residency, and future legislative changes, is another.
And voters appear to have gone a step further. Proposition 42, funded largely by the same tech donors who bankrolled the opposition to Proposition 40, would prohibit new state taxes on personal property and certain retroactive taxes. It is leading with roughly 53% support. Proposition 41, a companion measure that would bar new taxes from sidestepping the state spending limit and require audits of new special taxes, is trailing.
If Proposition 42 passes, it will create a constitutional obstacle to future wealth taxes, meaning proponents would need voters to change that restriction before pursuing a similar approach.
SEIU-UHW has already said it may return with another billionaire tax in 2028 if Sacramento doesn't find a way to address the state's healthcare funding challenges. The union, led by Dave Regan, has a long history of using the ballot to pressure the Legislature and industry, with mixed results.
And the next effort would face not only an emboldened opposition, but also an electorate that may have just voted to restrict the policy itself.
The broader lesson is not that Californians have suddenly developed sympathy for billionaires. It's that a popular idea, a workable policy, and a winning campaign are three different things.
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