The likely defeat of the California billionaire tax may energize Democrats in Congress to propose federal tax hikes on high earners along with a potential federal wealth tax, according to tax experts.
While the votes in California are still being counted, 56% of the state's voters have voted "no" on the billionaire tax while 44% voted "yes." The ballot measure requires a majority of votes for approval, so election experts say a defeat is likely. The tax, known as Proposition 40, would have imposed a one-time levy of 5% on the net worth of Californians worth over $1 billion.
Two ballot measures designed as poison pills against the billionaire tax are garnering strong support. Proposition 41 and Proposition 42, which limit revenue use and prevent any state taxation of personal assets, are both showing majority "yes" votes. If either gets more votes than the billionaire tax, the billionaire tax is defeated.
Service Employees International Union-United Healthcare Workers West, the healthcare union that sponsored the billionaire tax proposal, all but conceded defeat Tuesday night, saying they will try again in 2028 unless the legislature takes action to "make billionaires pay their fair share."
Proposals to raise income taxes on the wealthy fared better in other states. In Washington State, voters supported a new "millionaire tax," which would impose a 9.9% tax rate on household income of more than $1 million a year. In Colorado, the passage of a plan to replace the flat tax of 4.4% with a graduated income tax with a top rate of 8.4% on income over $1 million, is too close to call.