California’s proposed 5% billionaire tax could raise $100 billion for healthcare. But Elon Musk warns it could reach ‘everyone’

California voters will decide on a proposed billionaire wealth tax in November 2026. Proposition 40 would impose a one-time tax on the state’s richest residents, with supporters arguing it could raise billions for healthcare. Elon Musk, however, has warned that a wealth tax could eventually reach everyone.

According to The Guardian, Prop 40 would place a one-time 5% tax on the wealth of about 250 billionaires who live in California. Rep. Rohit Khanna, a Democrat from the state’s 17th district, makes the case in a Guardian op-ed. He says the tax would raise about $100bn, with 90% going to healthcare.

Khanna says those billionaires hold wealth equal to half of California’s economy. He says that wealth is up 20% this year alone. By his account, they would only fall back to their Labor Day net worth after paying. He also says the money would help keep 3 million Californians from losing coverage.

Musk warns the tax could go beyond billionaires

Federal cuts could cost Medi-Cal more than $30bn a year, he adds. Khanna names Elon Musk among the tax’s opponents. Musk warned on X that “they will eventually apply the ‘wealth tax’ to everyone”.

As Khanna describes it, Prop 40 covers only billionaires. The op-ed does not explain how the tax could be extended beyond that group, as warned by Musk. Opposition has also reached the streets, including a protest in San Francisco. The money gap is large. Khanna says Sergey Brin has spent $102 million to defeat Prop 40, while Peter Thiel gave $3 million.

He says billionaires have outspent supporters by more than five to one. Brin is also behind Prop 42, which would bar California from ever taxing billionaire wealth. Khanna says Gov. Gavin Newsom endorsed it the day after Trump awarded Brin and Musk the National Medal of Science.

The governor’s role is a central point in the op-ed. Khanna says Newsom tried to keep Prop 40 off the ballot. He says the healthcare workers behind the measure offered to cut the rate to 2% if Newsom backed it. Newsom said no, according to Khanna. Ads from the No on 40 campaign now feature the governor. The op-ed does not include a response from Newsom’s office.

The California Democratic Party took the same positions in August, Khanna says, endorsing Prop 40 and opposing Prop 42. Khanna ties the state fight to a federal push. In March, he and Sanders introduced the Make Billionaires Pay Their Fair Share Act. It would set a 5% annual tax on America’s 938 billionaires, who hold $8.2 trillion. Khanna says it would raise more than $4 trillion over a decade.

He frames the vote as a test for his party. “Every society is taxed. The only question is who will pay.” Voters will give California’s answer in November.