**Proposition 40, the union-backed initiative for a one-time 5% tax on the net worth of California residents above $1 billion (assessed as of late 2026 and payable starting 2027), faces organized opposition that has shaped trader expectations ahead of the November 3, 2026 ballot.** Governor Gavin Newsom has publicly opposed the measure, arguing it risks driving high-net-worth residents out of the state and eroding the long-term tax base, while advocating instead for a national wealth tax. Several Democratic-aligned groups, including some labor organizations, health care providers, and business interests, have joined the opposition or remained divided, even as the state Democratic Party narrowly endorsed it in early August. Polls show a narrowing or contested race, with recent surveys indicating support in the mid-to-high 40s percent range amid substantial undecided or opposing blocs. Billionaire-backed efforts and concerns over residency rules, potential legal challenges, and revenue volatility have reinforced skepticism about passage, leading traders to price the “No” outcome as the more likely result.