A majority of The Stanford Daily’s Editorial Board endorses Proposition 40, and we view the passage of the proposition a necessary first step in rectifying the nation’s growing wealth disparities. 

Californians are set to vote today on Proposition 40, the state’s “billionaire tax.” The measure would impose a one-time tax of 5% on the net worth of individuals who were residents on January 1, 2026 and had a net worth over $1 billion. 

Ninety percent of the revenue must be spent on healthcare services for the public, amid funding pressures on Medi-Cal and other state health programs. The other ten percent of the revenue would support education and food assistance, such as Calfresh. Proposition 40 requires a simple majority to pass. 

California voters have the chance to enact the nation’s first tax on billionaires’ net worth. The measure is unprecedented, and untested, but it arrives in a moment of staggering wealth inequality: The state’s roughly 250 billionaires now hold $2.3 trillion — around the same amount as the total annual income reported by every taxpayer in the state, according to economists who helped design the proposition. That wealth has grown largely untaxed, while more than one in three California households struggle to cover basic living expenses.

Changes at the federal level have amplified these struggles. In July 2025, the “One Big Beautiful Bill Act” (HR.1), was signed into law, leaving many families uncertain about their futures and how changes to federal assistance would affect their access to healthcare and food. 

Through shifts in eligibility, enrollment and work requirements, millions of Californians’ healthcare coverage through Medi-Cal was threatened, as well as food assistance benefits for hundreds of thousands of households. These changes have placed strain on low-income communities, leaving many without the assistance they rely on to sustain themselves and their families. 

Proposition 40 could help alleviate some of the projected harm to these communities by supplementing reductions in federal funding and providing additional resources to help maintain healthcare coverage and food assistance.

Proposition 40 is an unprecedented tax, yet a necessary step for the American political economy. The introduction of a wealth tax is foreign to many, leading to a plethora of logistical questions pertaining to its feasibility. However, Proposition 40 should be viewed as a long-awaited, substantive means of addressing the growing wealth inequality in California — establishing a poignant precedent for future economic policy. 

In 1911, Wisconsin developed the nation’s first graduated income tax. The proposed tax was met with stiff legislative opposition, with contrarians countering the unfair burden of double taxation. Businessmen even threatened to leave after the implementation of the tax. However, Wisconsin’s passage of the graduated income tax was a necessary precedent for the implementation of the sixteenth amendment’s federal income tax. 

If Proposition 40 is passed in California, it has the potential to have similar effects on the American political economy — initiating a powerful domino-effect across the nation.

The one-time tax would not fix inequality by itself, and as the first of its kind, it would face ample legal challenges. Yet, it would have the power to lay the groundwork for what comes next. Regardless of the measure’s success, other states could learn from it and iterate on its approach. 

The Editorial Board’s endorsement was not unanimous. Several members oppose Proposition 40 on economic, moral and fiscal grounds. 

One Board member has previously argued in The Daily that the tax is short-sighted: he argues that California has expanded expensive healthcare commitments even as Medi-Cal faces record costs and structural fiscal pressure, and instead should confront unsustainable spending rather than impose an unprecedented tax on accumulated, illiquid wealth. Critics also objected, on libertarian grounds, to the principle of taxing unrealized wealth simply because the state has identified a politically compelling use for the proceeds.

Proposition 40 has drawn criticism for its attempt to tax wealth that is largely illiquid and tied to corporate control. For example, the vast majority of Meta CEO Mark Zuckerberg’s estimated $220 billion net worth is concentrated in his roughly 13% stake in the company. According to Meta, if Proposition 40 were to pass, Zuckerberg would owe over $10 billion in taxes, and his voting power would decline from over 60% to 53%. 

To keep Zuckerberg from leaving the state to protect that voting power, Meta’s Board of Directors voted to issue a new class of non-voting shares that he could liquidate to pay the tax, if the measure passes. This dilemma illustrates one of Proposition 40’s biggest critiques: that the control and volatility that come with a highly illiquid net worth create complications for a first-in-the-nation wealth tax, and may prompt an exodus of billionaires from California. Several billionaires, including alumni Larry Page MS ‘98, Sergey Brin MS ‘95 and Peter Thiel ‘89 JD ‘92 have already relocated due to the proposed measure.

While we acknowledge the feasibility argument, the Editorial Board’s majority think that Proposition 40 has established adequate measures to address the taxation of illiquid assets. The precedent that Proposition 40 could establish outweighs the possible consequences that may arise, and we emphasize that critique is to be expected of any first-of-its-kind policy implementation. 

Thus, the majority of the Editorial Board endorses the passage of Proposition 40 — not just for its potential implications for Californians, but for its implications on the greater American political economy.