Hoover Institution (Stanford, CA)— A team of scholars committed to highlighting the flaws in California’s Proposition 40, the Billionaire Tax Act, welcomed the decision by the state’s voters to reject the ballot measure.
Voters rejected the proposed tax by a margin of 53-47 percent as of November 9.
Research Fellow Benjamin Jaros, part of a team of Hoover scholars who generated studies looking at the impacts of the proposal on the state’s public finances and future economic growth, welcomed the decision by voters to reject the idea.
“Voters have rejected Prop 40. They recognize, like many others who have left the state, that something is broken in the social compact for the state,” said Jaros.
“Individuals are willing to pay high taxes when they receive a commensurate level of good public services. The state of California is not meeting its end of that agreement. The state spends enormously on homelessness, education, high-speed rail, and healthcare, with little tangible to show for it. The voters of California recognized that misalignment and with this vote have made the point to California’s political class: get public expenditures under control before asking for more."
Proposition 40 would have imposed a one-time 5 percent tax on the assets of anyone with more than $1 billion in assets who resided in the state as of January 1, 2026.
The scholars conducted a significant amount of research into the failed proposal, including a Wealth Tax Primer, analyses of the net present value of the California proposal, and an exploration of the constitutionality of such a tax in the US legal context.
They found the tax proposal had already driven several billionaires to relocate elsewhere in the US, and that the tax would have brought in far less revenue than its proponents claimed.
Senior Fellow Joshua D. Rauh, who heads up Hoover’s State and Local Governance Initiative, participated in several debates and nationally televised segments dueling against supporters and creators of the wealth tax proposal, in which he stressed the significant potential for economic harm the tax would bring to Silicon Valley’s innovation ecosystem.
For more information, please contact Jeffrey Marschner, assistant director of media and government relations, at jmarsch@stanford.edu or 202-760-3200.
Learn more about Hoover’s State and Local Governance Initiative here.
