The “no” votes are leading in California, where Proposition 40 would impose a one-time wealth tax on the state’s billionaires. But amid Tuesday’s blue tsunami, the apparent rejection of what would be the nation’s first statewide wealth tax offers only limited comfort. Its defeat is likely to not erase the damage its prospective passage may already have done to California, or end the push to take the idea nationwide.
As of Friday, 54.5 percent had voted against the measure, compared with 45.4 percent in favor, a comfortable lead of roughly 800,000 votes. But two problems remain, one for the state, and one for the country more broadly.
The first issue according to Shawn Regan, a senior fellow at the Manhattan Institute, is that Prop 40 may have already inflicted damage on California’s economy. The threat of a retroactive wealth tax gives wealthy residents and entrepreneurs a reason to move, not just themselves, but their assets, future investments, and business expansion plans, elsewhere. Yes, many wealthy business owners have already left California, and state policies have already begun to hamstring its industries. But Prop 40 will accelerate and broaden that trend.
“The mere threat of a wealth tax has already inflicted lasting damage on California’s economy, prompting many high net-worth individuals to flee the state, taking their taxable income with them. Other state lawmakers considering a wealth tax should take note.”
— Tony Morley (@tonymmorley) November 6, 2026
But the broader issue is that the rejection of Prop 40 should not be mistaken for a rejection of wealth taxes in principle. And it still poses a threat for the rest of the country.
Consider governor-elect Xavier Becerra. In an interview just a week before the midterms, he said he opposed Prop 40 but agreed that taxes on the wealthy should be increased and that they should pay their “fair share.” Asked whether those taxes would be on income, he said he would “try” to keep them limited to income, but left a wealth tax on the table.
That leaves the country with a bleak outlook under a majority Democrat rule. The Wall Street Journal argued weeks ago that if California passed its wealth tax, Americans could expect to see it on the Democrat Party’s national platform in 2028. But the blue wave that swept the country earlier this week may convince Democrats to try it anyway.
The Democratic Socialists of America roughly doubled their presence in Congress on Tuesday, and that was bound to happen regardless of who won, Democrats or Republicans. As they continue trying to co-opt the Democrat Party wholesale, they are likely to push it further and further left. Democrats just won so handily, why shouldn’t they interpret their victory as an endorsement of their progressivism?
The overconfidence likely to settle into the Democrat Party could give it license to push leftward even further into 2028. As affordability remains the top issue amongst voters, and with Democrats presenting redistribution as the best solution, a national wealth tax doesn’t seem all that far-fetched.