The Proposition 40 Wealth Tax

On the November 3 ballot: a one-time tax of five percent of net worth on billionaires who were California residents on January 1, 2026, due in 2027, with a five-year spread at added cost. Real estate, pensions, and retirement accounts are generally excluded. The Legislative Analyst estimates tens of billions across several years; the $100 billion figure belongs to the proponents. The residency snapshot is already in the past, the constitutional questions are open, and no court has passed on any of them. For anyone near the threshold, the record of where they resided, and when, is now the fact that matters most.

Proposition 40 turns on a single day, and California is a presumptive residency state: no statute decides the question at a fixed day count the way the statutory residency states do; presence raises presumptions, and the record decides. Revenue and Taxation Code section 17014 counts as a resident everyone domiciled in the state unless outside it for a temporary or transitory purpose, and everyone present in it for more than a temporary or transitory purpose, while section 17016 presumes residency after nine months of presence in a year. A single date is never proved by that date alone. It is proved by the surrounding record of a life: where the home, the family, the physicians, the licenses, and the days actually were, before January 1, 2026 and after it. A departure claimed ahead of the snapshot will be examined the way the Franchise Tax Board already examines every claimed change of residency, with the burden resting on the person who claims the change. The mechanics are set out in the library: how the FTB evaluates a claimed departure, what actually happens in a residency audit, first letter to protest, and how days are counted and what evidence wins.

A second measure on the same ballot can stop Proposition 40 even if it passes. Proposition 42 would bar new state taxes on the ownership of financial assets and other personal property, which is the thing Proposition 40 would tax. Under article II, section 10(b) of the California Constitution, where two approved measures conflict, the one receiving the higher number of affirmative votes prevails, and the Legislative Analyst states that if Proposition 42 receives more yes votes than Proposition 40, Proposition 40 could be stopped from becoming law even with approval by a majority of voters. That contingency, rather than the constitutional questions that would follow enactment, is the largest single variable in whether the measure ever takes effect, and it resolves on the same night.

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