It's not just California's billionaire tax. Wealth is on the ballot in the midterm elections.

By Andrew Keshner and Victor Reklaitis

Several states are dealing with ballot measures tied to taxing the rich - and there may be even more initiatives on this front in 2028

State-level votes this fall are testing whether Americans think tax-the-rich approaches are part of the solution to their problems.

Americans are keeping a close eye on their everyday costs as they get ready to vote Nov. 3 or as they cast their ballots early. Millions of voters are also eyeing the riches of the nation's top 1%.

Affordability has dominated voters' worries as the midterm elections draw closer. A flip side to such kitchen-table concerns is also in focus: Wealth is on the ballot.

In California, a ballot measure before voters would levy a one-time tax of 5% on the wealth held by billionaires who lived in the state as of Jan. 1, 2026. The tax could be the first of its kind in the country - if it passes and survives legal challenges.

Meanwhile, Colorado voters are deciding whether people making more than $500,000 a year should pay steeper state income taxes. And in Washington state, voters will consider whether to repeal a newly enacted 9.9% tax on households that earn over $1 million.

The votes come after lawmakers this year in three Democratic-leaning states - Maine, Hawaii and Rhode Island - established higher income taxes on millionaires. The wealth-related measures also arrive against a backdrop of economic frustration and uncertainty. Worker pay hasn't grown as fast as prices for months. Nationally, the average price for a gallon of gas is around $4.30, which burns deep in drivers' minds. And people are tense about their job prospects, with many staying where they are for now because hiring is tepid.

The state-level votes will test whether Americans think tax-the-rich approaches are part of the solution to their problems.

Especially with California's Proposition 40, there's an "increased sense of urgency" due to the power and money clustering at the top, said Carl Davis, research director at the Institute on Taxation and Economic Policy, a left-leaning think tank. "A lot of people are concerned this is just the beginning," he said, pointing to skepticism that AI will help workers and not just Wall Street.

Ahead of the state-level votes, new Federal Reserve research shows diverging finances for America's rich and poor. Young families, renters and households without high-school diplomas saw declines in their net worth from 2022 to 2025, according to the Fed's research. The net worth of wealthy families increased in the same period. Last year, households in the top 10% had nearly $5 million in median net worth, researchers noted, while the median U.S. net worth was $215,900.

Six in 10 adults believe there's too much economic inequality, according to a Pew Research Center poll released last week. Nearly one-quarter said the economic system needs to be "completely rebuilt" - up from 14% in 2019, Pew's pollsters found.

The upcoming votes on taxing the wealthy are "speaking to the real concerns the American people have," said Adam Michel, director of tax-policy studies at the Cato Institute, a libertarian think tank. Higher taxes, however, are the wrong answer, he said.

There's a widening split between largely Republican-leaning states with lower income taxes and Democratic-leaning states with higher taxes for richer residents, Michel noted. The Colorado and Washington votes would extend "those bad policies to a couple more states," he said.

The stakes are much larger with California's vote, Michel said. "That would signal something bad for the American entrepreneurial ecosystem that has set us apart for so long," he told MarketWatch.

Sen. Bernie Sanders of Vermont - a key progressive figure- traveled to California this month to rally voters to approve Proposition 40. The ballot has split Democrats in the Golden State. Democratic California Gov. Gavin Newsom opposes Prop 40, but his party endorsed it.

Sanders, an independent who typically votes with Democrats, recently told San Francisco rallygoers that the ballot measure addresses the country's biggest question: "Can the American people sustain democracy, take on the greed and power of the billionaire class, and create an economy that works for all? Or are we destined to live in an oligarchic society where our economic and political lives are controlled by a handful of the wealthiest people in the world?"

Sergey Brin has been one deep-pocketed opponent against the ballot measure. Google's (GOOGL) (GOOG) co-founder has spent more than $100 million to oppose Prop 40 through an organization called Building a Better California, campaign-finance filings show.

Brin has previously said he's wary of Prop. 40 because of his early years spent in the U.S.S.R. "I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don't want California to end up in the same place," he told the New York Times. Brin didn't immediately respond to MarketWatch's request for comment, submitted through Building a Better California.

The link between California's big vote and D.C.'s big 2025 vote

Republicans have centered their midterm campaigns in part on the tax cuts they delivered with 2025's One Big Beautiful Bill Act. The law kept tax rates at their current level and introduced a range of temporary write-offs for senior citizens and certain workers.

Republicans have been sure to talk up the law's tax cuts - stressing that all Democrats in Congress voted against the law.

The Republican tax law helped set the stage for California's wealth-tax showdown. The One Big Beautiful Bill Act thinned social safety nets and tightened requirements for Medicaid coverage. Democrats have said the tax law was a big win for rich Americans at the expense of other taxpayers.

Most of Prop 40's tax revenue would bring money to California's Medicaid program. How much money is a matter of debate. Its supporters, including an array of labor unions, say the tax could raise $100 billion.

Critics at the Hoover Institution, a conservative think tank, say that's an overestimate. The tax could raise $40 billion upfront, but it would eventually cost the state at least $25 billion once billionaires take their money and business opportunities elsewhere, Hoover's researchers said.

California voters will also consider two competing ballot measures that could sink Prop 40. If the rival measures score more "yes" votes, the proposed wealth tax could be stopped from becoming law even if it gets majority support.

President Donald Trump has repeatedly maintained during his current term that Democratic-run states are driving away successful residents when they implement tax increases. He said in a social-media post in April that "Rich, Job Producing people and companies are being forced to FLEE at levels never seen before."

"The Tax Base in California is literally disappearing, as some of the richest people and companies in the World have no choice but to leave. They want to put on a Wealth Tax, which gives them absolutely no alternative," Trump added.

He once had a different stance. In 1999, when Trump was a candidate for the Reform Party's presidential nomination, he floated a one-time wealth tax of 14.25% on Americans with a net worth of more than $10 million, saying that would wipe out the national debt.

Prop 40 seems doomed, but so does Washington state's initiative

The ballot measures focused on taxing the wealthy look on track for a mixed performance on Nov. 3, if prediction markets are correct with their forecasts.

Prop 40 has only around a 22% to 24% chance of getting approved by California's voters, according to the latest figures from one prediction market, Kalshi, and another, Polymarket. (MarketWatch's publisher, Dow Jones, has a data partnership with Polymarket.)

Colorado's ballot measure, which aims to raise the state's income-tax rate for higher earners, has a 30% likelihood of getting approved, according to Kalshi's data. Known as Amendment 87, it aims to raise the state's income-tax rate for higher earners so that those making above $500,000 would get taxed at a new rate of 7.4%, up from 4.4%, and those making above $1 million would face a rate of 8.4%.

In Washington state, passage of Initiative 645 would scrap a new income-tax rate of 9.9% for households that earn more than $1 million, as well as prohibit future state and local taxes on income. Voters appear poised to reject I-645, with Kalshi giving it just a 17% chance of success, while Polymarket puts it at 29%. The Evergreen State's 9.9% tax for higher earners was just enacted by the state's legislature earlier this year and is slated to start getting collected in 2028.

Prelude to 2028?

The wealth-focused ballot initiatives before voters this election season could help spark more efforts to tax the rich at both the state level and on a nationwide basis in the coming years, according to Andrew Lokay, a senior research analyst at Beacon Policy Advisors.

"Even if Prop 40 fails, it sets a precedent by making a wealth tax tangible rather than merely theoretical. This could inspire state lawmakers in the future or Democrats on the federal level if they gain unified control of the House, Senate and White House," Lokay said in a note. "While Newsom opposes Prop 40, he has instead called for a national billionaire tax."

Newsom wrote earlier this year regarding Prop 40 that he's "voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending," referring to how 90% of the revenue from the one-time tax would be required to go to healthcare services for the public. But the California governor, who is widely viewed as likely to seek the Democratic presidential nomination in 2028, said he wants a nationwide minimum tax on billionaires.

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