California Proposition 40 was supposed to be the moment America tested whether billionaires could be compelled, rather than merely asked nicely, to share their fortunes. The measure would have levied a one-time 5 percent tax on the net worth of the state's roughly 200 billionaires, directing the money to health care, food assistance and education. On November 3, 2026, voters crushed it. Independent polling before the vote showed Proposition 40 trailing badly, with only 43 percent in favor and 57 percent opposed, after a media campaign organized and bankrolled by the billionaires who stood to pay the bill. The sponsoring union, the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), conceded defeat and vowed to come back in 2028 unless state lawmakers acted first. The defeat lands at an awkward moment for anyone still clinging to the idea that the ultra-wealthy will eventually do the right thing voluntarily. The newest Forbes 400 Philanthropy Score, published this September, found that America's 400 richest people have given away just 4.4 percent of their collective net worth over their entire lifetimes, and that figure is actually falling, down from 4.6 percent in 2025 and 5 percent in 2024, marking the highest share of ungiven wealth since Forbes started tracking the metric in 2020. Compare that to an ordinary household. Research from Grey Matter Research found that the average American donor gives just 1.22 percent of household income to registered nonprofits today, but that's actually a steep decline from 1.95 percent in 2017, and other tallies that include lower-income givers put the number higher. Households earning under $50,000 a year were found to give away the largest share of their income of any bracket, 14.2 percent, according to one widely cited breakdown of Internal Revenue Service (IRS) data, while households earning between $100,000 and $1 million typically give the least, somewhere around 2.4 to 2.6 percent. The Giving Pledge, the headline-grabbing 2010 campaign by Bill Gates, Melinda French Gates and Warren Buffett to get the world's richest people to commit at least half their fortunes to charity, has not closed that gap either. A July 2025 report by the Institute for Policy Studies marking the pledge's fifteenth anniversary found that the original 57 signers have given an estimated $201 billion to charity to date, and that of the 32 original signers still alive, 24 now have more wealth, adjusted for inflation, than they did in 2010. Only one living couple from that founding class, Laura and John Arnold, has actually given away more than half their assets. Of the 22 original signers who have died, just eight fulfilled the pledge outright. The report's own language was blunt about the project's trajectory, calling it weak and unfulfillable. Even Melinda French Gates, one of the pledge's founders, told an interviewer in December that when she looks at her fellow billionaires and asks whether they've actually been giving money, the honest answer for many of them is no. Part of the problem is structural, not just a matter of willpower. Roughly 80 percent of what Giving Pledge signatories have donated has flowed into private foundations and donor-advised funds, vehicles the donor continues to control and which can sit on the money for decades before a dollar reaches a working charity or a person in need. Treasury Secretary Scott Bessent weighed in on the pledge too, calling it well-intentioned but very amorphous, while suggesting wealthy people signed on partly out of fear the public would come after them with pitchforks. The tax code compounds the imbalance rather than correcting it. In the United States, the charitable deduction is only available to taxpayers who itemize, and analysis of federal filing data found that of the roughly 12 million tax returns that claimed the deduction, two-thirds reported income of $100,000 or more, and those filers claimed 90 percent of the deduction's dollar value, with half of all charitable deduction dollars claimed by taxpayers earning more than $1 million. Because the deduction's value rises with a taxpayer's marginal tax rate, a dollar given by a top-bracket donor is worth more at tax time than the same dollar given by someone in a lower bracket, and research from Inequality.org found that wealthy donors who route gifts through private foundations and donor-advised funds also shelter capital gains, estate and gift taxes in the process, savings unavailable to someone writing a check straight to a food bank. New federal tax rules phased in for 2026 tinker at the margins. Itemizers must now clear a floor of 0.5 percent of adjusted gross income before any deduction kicks in, the tax value of deductions for top earners is capped at 35 percent instead of tracking the full 37 percent bracket, and for the first time non-itemizers can claim a modest deduction of up to $1,000 for individuals or $2,000 for joint filers on cash gifts. It is a small rebalancing gesture that leaves the fundamental tilt toward the wealthy intact. International comparisons do not flatter the United States' overall generosity position so much as expose how differently rich and poor give everywhere. American private philanthropy runs at about 1.44 percent of gross domestic product (GDP), nearly double Canada's 0.77 percent and about triple the United Kingdom's 0.54 percent. France tried a straightforward wealth tax, the solidarite tax on wealth, for decades before scrapping it in 2017 and replacing it with a narrower tax on real estate holdings, after years of argument that it was driving wealthy residents out of the country, even though the tax raised only about 1.5 percent of France's total receipts and half of the households who paid it owed less than 2,000 euros a year. Norway and other countries have run their own wealth tax experiments with mixed results, and the fight over whether a tax chases money and people away or merely clips a fortune that would otherwise keep compounding untouched is exactly the fight that just played out in California. Where the donated money actually goes once it is given is its own minefield. Charity watchdogs like the Better Business Bureau Wise Giving Alliance generally recommend that total overhead, meaning fundraising plus administrative costs, stay below 35 percent of a nonprofit's budget, and Charity Navigator gives full marks to organizations that spend 70 percent or more directly on programs. Most reputable charities land somewhere in a program-spending band of roughly 75 to 90 percent, with the rest split between fundraising, marketing and administration, though researchers who study donor behavior have found that even modest overhead spending triggers outsized donor backlash, with one study finding the share of participants willing to support a charity fell from 66 percent to under 30 percent once they learned some of their gift would cover overhead, regardless of whether that overhead went to fundraising or to salaries.
📈 business
Billionaires Say Give Generously. They Mean Everyone Else.
A California ballot measure to make the state's billionaires pay a one-time 5 percent wealth tax just went down in flames after a $300 million ad blitz funded by the very billionaires it targeted. Meanwhile ordinary households keep handing over a bigger share of their shrinking paychecks to charity than the Forbes 400 give away of their fortunes.
My Take
The defeat of Proposition 40 is the clearest data point anyone needed. Given a direct, on-the-ballot chance to make roughly 200 of the richest people on earth hand over a single, one-time slice of wealth that most of them would barely notice, California said no, after the people being asked to pay spent a reported $300 million making sure the answer was no. That is not a market correcting itself. That is money buying the outcome it wanted, in full view, with receipts. The comparison that should make everyone furious is simple arithmetic. Forbes' own numbers show America's richest 400 people have given away 4.4 percent of their net worth across entire lifetimes, and that share is shrinking year over year even as their fortunes balloon. Ordinary donors, meanwhile, are giving a bigger slice of a paycheck that barely covers rent, and lower-income households consistently give away a larger percentage of what they have than households earning six or seven figures. The sob-story fundraising video exists because charities have learned, correctly, that guilt works better on someone scraping by than it does on someone who could liquidate a rounding error of their stock portfolio and solve the problem outright. Nobody is arguing billionaires should be strip-mined. The argument is that a voluntary pledge with no enforcement mechanism, that pays out mostly into foundations the donor still controls, dressed up as moral leadership, is not a substitute for a tax system that actually collects. The Giving Pledge was supposed to prove self-regulation works. Fifteen years and one failed California ballot measure later, it has proven the opposite.
What Happens Next
SEIU-UHW, the healthcare union that sponsored Proposition 40, has already signaled it will try again at the California ballot box in 2028 unless state lawmakers move first on their own billionaire tax. In Washington, the defeat is expected to shift energy toward Congress, where Ro Khanna and Bernie Sanders have proposed the Make Billionaires Pay Their Fair Share Act, an annual rather than one-time federal wealth tax targeting the roughly 938 billionaires in the United States, projected to raise an estimated $4.4 trillion over a decade if it ever passed, which remains a heavy political lift. On the philanthropy side, expect more scrutiny of the Giving Pledge itself. The Institute for Policy Studies has said it intends to keep publishing its periodic audits of signatories' actual giving versus their promises, and Forbes will issue an updated Philanthropy Score for its 400 list again next year, a number that has now fallen for two consecutive years. Watch also for state-level copycats of the California effort, and for continued relocation of wealthy residents to lower-tax states such as Nevada and Florida as a hedge against future attempts, a pattern already visible around Lake Tahoe property sales during the Proposition 40 campaign. For the charitable sector itself, the new federal tax rules that took effect for 2026, including the AGI floor for itemizers and the new non-itemizer deduction, will take a full tax-filing season to show their real effect on giving patterns, and nonprofits dependent on major wealthy donors are already bracing for tighter major-gift pipelines as a result of the deduction cap for top earners.
What History Tells Us
France ran a national wealth tax for decades, the solidarite tax on wealth, before abolishing it in 2017 in favor of a narrower levy on real estate, after sustained argument that it was pushing wealthy residents abroad even though it generated only about 1.5 percent of the country's total tax receipts and half of the households who paid it owed less than 2,000 euros annually. The California fight over Proposition 40 echoed that same argument almost exactly, down to reports of billionaires buying lakefront property across the Nevada state line in anticipation of the tax.