California’s Proposition 40, which would impose a one-time 5% tax on the net worth of the state’s billionaire residents, could end up costing California $39 billion in today’s dollars rather than raising the revenue its supporters promise, according to a new Stanford University analysis.
Supporters of the measure have claimed it could raise as much as $100 billion, with 90% of the proceeds directed toward health care funding. But Stanford researchers Benjamin Jaros and Joshua Rauh ran 100,000 simulations of the policy’s likely outcomes and found a net negative revenue impact in 85% of plausible scenarios.
The study estimates the tax would actually collect roughly $30 billion, within a range of $28 billion to $36 billion, far short of the headline figures cited by proponents, largely because of billionaires relocating out of state in response to the tax.
According to the researchers, billionaire departures from California have already eliminated nearly 30% of the proposed tax base, with seven billionaires who have publicly left the state collectively accounting for roughly $540 billion in wealth.
The measure applies to billionaires who were California residents as of January 1, 2026, meaning the tax base is partly fixed, but the Stanford analysis suggests the threat of future departures, and the economic activity those individuals take with them, could outweigh whatever the state ultimately collects.
The findings add a significant data point to the debate over Proposition 40 ahead of the November vote, giving opponents a concrete economic case that the measure could leave California worse off even if it succeeds in taxing billionaire wealth directly.
