One year ago, the idea of a billionaire tax in California was still in its infancy.

It wasn’t yet one of the most contentious ballot measure fights in state history – pitting Democrats against Democrats, drawing national attention from political heavyweights, and netting hundreds of millions of Silicon Valley dollars to fight it. Back then, it was a bold and desperate answer to Donald Trump’s healthcare cuts.

Trump had just signed the One Big Beautiful Bill Act, which dictated a trillion dollars of Medicaid, Affordable Care Act and other healthcare funding be cut over the next decade to offset sweeping tax cuts. When the bill goes into effect in January, that could mean more than 3.4m Californians will lose their coverage, including millions of children.

“That’s why we were willing to do something that lots of people said was crazy,” said Dave Regan, the divisive architect of the billionaire tax and president of the healthcare union SEIU-United Healthcare Workers West (SEIU-UHW). “To us, what’s crazy is doing nothing and watching millions of people lose coverage.”

Now, with the midterms less than a week away, California voters will decide on whether to pass the ballot measure known as Proposition 40. The proposal would levy a one-time 5% tax on billionaires living in the state as of 1 January 2026, the proceeds of which would fund healthcare programs, along with some education and food assistance.

The initiative has its critics, even among Democrats, who point at its structure as a one-off tax that would only fund certain healthcare programs. But its most vocal critics have been billionaires.

The idea of taxing the Golden State’s ultra-wealthy has snowballed into a messy brawl over the last year. Progressive politicians have become bedfellows with tech billionaires, opposition ballot measure campaigns have been mounted, Signal chats leaked, and boatloads of money have been spent.

Tech billionaires have treated the proposal as an existential threat, dumping upwards of $356m into “independent expenditure-only” political action committees (Super Pacs) to stop it. In the first two weeks of October, according to the most recent campaign filings, the opposition campaign spent more than $42.8m – surpassing $2.5m per day. That money went to an army of consultants, who have been tasked with lobbying politicians, blanketing the airwaves with ads and placing op-eds in Latino newspapers across the state.

“This looks like it’s going to be the most expensive ballot measure ever,” said David McCuan, a political science professor at Sonoma State University. “Not in California history, but in the history of the world.”

Meanwhile, the far-less-funded pro-Prop 40 camp has relied on viral social media campaigns from influencers and actors, including the artist Shepard Fairey and actor Mark Ruffalo, and raucous rallies headlined by leftwing politicians. During one packed event in San Francisco earlier this month, Vermont’s Bernie Sanders said: “The whole country, and frankly people from around the world, are paying attention to what is happening here.”

While Prop 40 is just one ballot measure election in one state, it is causing ripple effects nationwide. It comes at a time when affordability is top of mind and the disparity of wealth in the US hasn’t been so stark since the Great Depression. McCuan said the billionaires’ big spend was partially due to a fear of contagion to other states. Likewise, supporters say they hope the proposed tax is a harbinger for referendums on wealth inequality across the country.

Regan and his union got started on their endeavor last summer. After Trump signed his bill on 4 July, Regan’s team began making calls. They put together a working group of policy experts, economists, lawyers, researchers and political consultants, who came up with the one-time 5% tax to keep hospitals open and union healthcare workers in their jobs.

Regan is known for using the ballot measure process as a political tool to strongarm deals with lawmakers and push causes important to the SEIU-UHW. Since 2012, the union has sponsored 48 initiatives. The strategy with the billionaire tax was to sharpen the focus on inequality.

“We worked to come up with something that could draw enough support from voters, and that could avoid a catastrophe,” Regan said. “We just bore down on that.”

When their plan became public after the October 2025 filing deadline, the billionaires hatched a working group of their own.

‘If there’s an impediment, just buy it’

Chris Larsen, a cryptocurrency mogul, hosted a Christmas party in northern California’s swanky Marin county last December, according to Bloomberg. It was in a treehouse tucked into a grove of towering redwood trees. The singer Janelle Monáe performed and California governor Gavin Newsom was there, along with Google co-founder Sergey Brin.

Newsom’s relationship with Brin goes back decades to when he was mayor of San Francisco. The governor, now a presumed presidential candidate, had flown on Google’s jet with Brin, and the two men attended each other’s weddings. But a lengthy exchange they reportedly had at Larsen’s party was far from collegial.

Brin confronted Newsom about the proposed billionaire tax, according to people who spoke with Newsom, Bloomberg reported. The Google co-founder, currently worth about $245bn, told the governor it was forcing him to leave California.

Newsom and Brin did not respond to the Guardian’s detailed list of questions.

By that point, more than a dozen tech executives and prominent Silicon Valley venture capitalists had reportedly already joined an encrypted Signal group chat expressly dedicated to burying the billionaire tax, the San Francisco Standard reported. Brin and Larsen were members, along with venture capitalist Marc Andreessen, PayPal co-founder Max Levchin, Stripe chief executive Patrick Collison and investor Ron Conway, according to people who saw the chats.

Larsen and Levchin declined to comment. Brin, Andreessen, Collison and Conway did not return requests for comment.

The group brainstormed ideas for fighting the tax. They reportedly met every Tuesday for months via video call, debated fleeing the state, and tussled over how much to trust Newsom because of his position as a Democratic governor of a blue state. Newsom has long opposed state wealth taxes and quickly came out against the billionaire tax, repeatedly saying it would “drive a race to the bottom” and stifle innovation as the ultra-wealthy leave.

While a handful of those ultra-wealthy have left, the vast majority of the state’s 200-plus billionaires have remained – including Nvidia CEO Jensen Huang, who said he’s “perfectly fine” with the tax. Initially, Meta CEO Mark Zuckerberg threatened to leave California, but filings with the Securities and Exchange Commission last week revealed he struck a deal with his company’s board to help him foot the bill if Prop 40 passes in exchange for staying in the state.

Among others who indicated they’re departing are Palantir co-founder Peter Thiel, Trump’s former AI and crypto czar David Sacks, and Google co-founders Larry Page and Brin. Last December, Brin moved to a $42m mega-mansion on the Nevada side of Lake Tahoe, just steps from California’s border.

Brin is the de facto ringleader of the Prop 40 opposition campaign. Through a Super Pac called Building a Better California, he’s contributed at least $102m to the cause – more than any other donor. Brin worked with political operatives and had his family office map out plans to trounce the tax, according to the New York Times. Brin is also a frequent guest at the White House and was awarded the National Medal of Science by Trump earlier this month.

Abby Lunardini, a spokesperson for Building a Better California, said: “Californians deserve to know the facts about a measure that would permanently gut the state’s budget, tax base, and economic advantage, all while making the problem it’s supposed to be fixing – healthcare funding – worse.”

Another major early donor to the opposition campaign was Thiel, who gave $3m to the California Business Roundtable Super Pac at the end of December. Larsen has donated more than $23m through various Super Pacs, and former Google CEO Eric Schmidt has given more than $42m, according to campaign finance filings.

At least some of the donations were in cryptocurrency, which had to be converted to dollars under state rules, documents show. Campaign expenditure filings for the tech Super Pacs reveal more than $40,000 has been spent on crypto processing fees alone. Company stock shares given by founders like DoorDash’s Tony Xu reportedly comprised another significant chunk.

The opposition campaign’s initial goal was to ensure Prop 40 didn’t make the ballot. They already had Newsom publicly vowing to defeat the proposal. The next step was to go after the signature-gathering process. Anyone can put forward a ballot measure in California if they can gather enough signatures by the filing deadline. Signature-collection firms charge per signature, and the price fluctuates each election based on demand.

Opponents to the billionaire tax came up with a strategy to kneecap SEIU-UHW’s signature-gathering process by introducing several ballot measures of their own to boost the price of each signature – the going rate went from $4 per signature to a record-breaking $36.

The venture capitalist Conway spelled it out in a podcast in March: “Our job is to get Gavin to negotiate this so that it doesn’t get to the ballot. So maybe they don’t get the signatures.”

When the SEIU-UHW used mostly volunteers to amass their signatures, the opposition campaign reportedly attempted another plan – purchase the firm the union used for signature-collection, so that those signatures couldn’t be used, according to Regan. The same idea was floated in the Signal chat, according to the San Francisco Standard, with one participant reportedly messaging: “That’s what you would do in business: If there’s an impediment, just buy it.”

Fred Kimball is the president of the signature-gathering firm Kimball Petition Management, which worked with the SEIU-UHW and pioneered this type of business. He said that not only did his company endure denial-of-service cyberattacks, which stalled their signature validation process, but he received two calls from unnamed individuals inquiring about a sale.

“It never got any further than that,” Kimball said. “The requirement would be that I’d have to turn over the signatures. Once you do that, it’s all over … My dad started this industry, there’s no way I’d do that.”

By the end of April, well before the signature filing deadline in June, the SEIU-UHW took a victory lap, announcing they’d gathered 1.55m signatures – nearly double the necessary amount to qualify for the ballot.

“This is a David versus Goliath battle,” Mayra Castaneda, an executive member of SEIU-UHW, said at a press conference at the time. “David has just won the first round.”

The showdown

After the union’s signature-gathering triumph, the responsibility to kill the billionaire tax rested with Newsom, at least in the eyes of billionaires. Newsom’s objective was to reach a compromise with the SEIU-UHW to withdraw its proposal before the June deadline. The governor and Regan had been in talks since December, Regan said, but they remained at odds in finding a solution to the impending healthcare crisis.

Newsom had brought together a coalition to negotiate a deal, enlisting other unions and interest groups to oppose the tax. The governor also tried to get Regan to his side, according to Regan. He said Newsom’s chief of staff invited the union boss to a press conference, in which the governor would credit Regan for a national wealth tax proposal. Regan said Newsom’s national plan lacked teeth, so he declined.

SEIU-UHW offered a counter proposal: they’d drop the one-time tax from 5% to 2% if Newsom endorsed it. In a letter to the governor, the union wrote: “Let’s save patient lives together.”

“But that was a non-starter,” Regan said. So SEIU-UHW announced in late June that it was advancing to the ballot, saying: “David won the second round against Goliath”.

Two billionaire-backed countermeasures also made the ballot, however: Proposition 41 and 42. Prop 41 directly targets the billionaire tax, while Prop 42 is a general proposal on limiting certain new taxes and would ban any taxation on billionaire wealth. If either measure receives more yes votes than Prop 40, it will stop the billionaire tax from taking effect – even if it passes. Regan calls them “poison pills”.

After that, the battle entrenched. Flush with tech money, which kept rolling in, the opposition side grew quickly, landing dozens of endorsements. Planned Parenthood Affiliates of California, the lobbying branch of the healthcare group, joined the cause, as did the influential California Teachers Association, the California Medical Association, and a host of building and trade unions and public safety associations.

The newly formed coalition launched an ad campaign calling Prop 40 a “dangerous wealth tax” and “reckless experiment”. The campaign received endorsements from several prominent Democrats, including Xavier Becerra, the gubernatorial candidate; Katie Porter, a former congresswoman; and Daniel Lurie, the mayor of San Francisco. While Porter contends the tax doesn’t fix the underlying system, Lurie argues the tax would drive revenue out of California. Becerra says billionaires should pay their fair share, but Prop 40 isn’t how to do it.

When asked about No on 40’s campaign strategy, a spokesperson for the campaign instead shared a comment from Jack Chou, the president of the California Medical Association, who said the cause has gained endorsements because the measure “permanently damages our economy and budget while failing to fix our healthcare system, improve care, or lower costs.”

The Prop 40 campaign looked doomed as its core allies, Democrats and unions, were jumping ship. But then things took a turn.

In August, the California Democratic party held a board meeting in San Diego, where they voted on endorsing Prop 40. At first, the measure lost. But, according to people familiar with the matter, Congresswoman Maxine Waters stepped in and condemned her colleagues for not supporting the tax. A reconsideration was introduced and the votes swung in favor of Prop 40.

State filings show that the opposition campaign had donated tens of thousands of dollars to the California Democratic party, along with the Democratic parties of San Diego, Orange county and Los Angeles county. Despite the donations, all of these Democratic parties have endorsed the billionaire tax.

Ro Khanna, the Democratic congressman who represents the district that includes Silicon Valley, has been a staunch supporter of Prop 40. “It makes no sense to me why any democratically elected official or traditional Democratic allies wouldn’t be supporting this,” he said during a June press conference. “People want folks who are going to stand up to the billionaires and the trillionaires.”

Another turning point was the endorsement of the powerful California Federation of Labor Unions AFL-CIO, which lists 1,300 unions in its roster. During its biennial convention in August, its members voted overwhelmingly to endorse Prop 40.

Lorena Gonzalez, the president of the federation, described the scene on the floor of the convention center that day. One-by-one, union healthcare workers stood up and spoke passionately about the need to fund hospitals, maternity wards and emergency rooms to ensure they don’t close in the wake of Trump’s One Big Beautiful Bill Act, she said.

“Once you heard that, and heard that billionaires got tax breaks from the big BS bill and that Medi-Cal got cut, it just became a no-brainer,” Gonzalez said. “I’m not going to be a labor movement that bows down to the establishment and is scared of taking on billionaires.”

Mudslinging abounds and record-breaking spending

As the election nears, California residents have witnessed the two campaigns vie for attention and relentlessly demonize each other.

Last week, after Newsom endorsed the billionaire’s Prop 42 countermeasure, which would stop the state from ever passing a wealth tax, the Prop 40 campaign released an attack ad on the governor. Likewise, the opposition campaign sent voters across the state a glossy four-page mailer that read: “You’re Next.”

Since July, the tech Super Pacs have upped their donations to the committees opposing Prop 40 and supporting Props 41 and 42. The three campaigns have received a total of more than $379.5m – making it the most expensive opposition campaign in state history. “We’ve said for months we’re going to get carpet-bombed by these guys,” Regan said. “Their so-called strategy, there’s only one prong to it: we can buy anything we want.”

Along with the flood of spending and negative ads, accusations and personal attacks have been flying in all directions. Much of this has been focused on Regan, who’s been criticized in Democratic and union circles for being an aggressive bulldog and spending his union’s resources to push ballot measures.

In one specific instance, Courtni Pugh, a former executive director at the SEIU, accused Regan of physically assaulting her in 2009, according to the Los Angeles Times. She said he kicked open her office door, pinned her against a wall and screamed that she was a “dumb ass”. The SEIU investigated the allegations this year and wrote in a report that Pugh’s claim was substantiated. Regan denied the alleged abuse, claiming that the allegations against him are retaliatory for his support of Prop 40. (The union investigation did not substantiate Regan’s retaliation claim.) Law enforcement did not investigate the abuse allegations and no charges were brought.

Pugh is now serving as a senior advisor to Becerra and working as a consultant for the No on 40 campaign. Regan told the Guardian: “Courtni Pugh, at Hilltop Solutions, wants to invent accusations about me from 17 years ago on the payroll of the billionaires.”

Pugh said Regan’s response “is offensive to the people – especially the women and women of color – who have had to endure his threatening behavior”. A spokesperson for Becerra said Pugh has not advised him on his position on the wealth tax.

The newest Democrat to vocally oppose Prop 40 is former congresswoman Porter, who’s known for taking corporate executives to task. She has written op-eds in local papers, posted videos on social media, and is quoted in ads and mailers saying: “Prop 40 does nothing to reform our healthcare system.” After losing a gubernatorial bid to Becerra earlier this year, she said she was retiring from politics. But she’s waded back into the fray with Prop 40. Late last month, Newsom also appointed her to a paid position on the board of governors for the state’s community colleges.

Despite the controversy and criticism, the SEIU-UHW has brought notable figures to its side. Last month, six Nobel prize-winning economists wrote an open letter endorsing Prop 40. Doing the math, they wrote that the combined wealth of California’s billionaires is $2.3tn, equal to the entire annual income of all 20m taxpayers in the state. They pointed out that billionaires’ net worth has grown nearly 150% over the past couple of years, fueled by the AI boom. “This tax only partially plays catch-up, but it is a move in the right direction,” the economists wrote.

Now it’s up to the voters, who appear to be unswayed by the onslaught of messaging. A Politico poll last week showed that 84% of registered voters said they’d seen campaign ads involving Prop 40 and the majority of them weren’t persuaded into changing their positions. Despite that, the measure has fallen in the polls. While it enjoyed a seven-point lead over the summer, it’s since fallen to a one-point lead.

For Regan, win or lose, he said the idea of taxing billionaires isn’t going away.

“I think this campaign has already put this issue on the national agenda in a very significant way,” he said. “This issue is going to be at the center of the nominating process for a Democratic candidate in 2028.”