California voters soundly rejected a first-of-its-kind tax on billionaires.

With about half of the projected votes counted, the Secretary of State reported that 56.4% of voters –a nearly 800,000 vote margin – rejected Proposition 40,  a one-time 5% tax on the net worth of the state’s roughly 200 billionaires.

The tax would have targeted the billionaires' stocks, bonds, business holdings and other valuable personal property.

Service Employees International Union-United Healthcare Workers West, the union pushing the measure, says it would generate an estimated $100 billion for healthcare and education to be spent over the next five years.

The nonpartisan Legislative Analyst’s Office estimates the tax would raise “tens of billions of dollars” over several years, well short of the union’s projection, and says billionaires leaving the state could cut income tax revenue by less than $1 billion a year.

The results could also be complicated by two competing ballot measures: Propositions 41 and 42. Proponents of those measures designed them to conflict with Prop. 40, which means if either countermeasure receives more votes than Prop. 40, it nullifies the billionaire tax.

The union and other supporters argue that billionaires should pay their fair share to support social services programs the Trump administration cut last year.

From the outset, Prop. 40 revealed divisions in the Democratic Party and galvanized some of Silicon Valley’s wealthiest executives to spend hundreds of millions to defeat it.

Gov. Gavin Newsom became one of its earliest opponents, attempting through backroom negotiations to keep Prop. 40 off the ballot altogether. San Jose Mayor Matt Mahan also opposed the measure.

Newsom endorsed Prop. 42, the billionaire-backed countermeasure designed to ban all wealth taxes in California and kill Prop. 40, which voters were rejected by a 55%-45% margin.

Newsom, along with a cadre of Democratic allies such as Planned Parenthood of California and the California Teachers Association, argued a one-time tax would not solve the state’s fiscal woes and would drive wealthy residents out of state.

Despite party and labor divisions, the California Democratic Party and California Federation of Labor Unions supported the initiative and opposed its counter measures, arguing the state needs more revenue to shield workers and everyday Californians from the effects of dramatic federal healthcare cuts expected to kick 2 million residents off health insurance.

Billionaire opponents spent heavily

Billionaire opponents and business interests poured $316.7 million into the campaign to stop Prop. 40 — including support for Props. 41 and 42 — telling voters nearly the same message: Wealthy residents who contribute jobs to the economy and income tax to state coffers have already left, and more will follow if the initiative passes. They also made a largely misleading claim that lawmakers could lower the threshold of the wealth tax to include everyday Californians.

Google co-founder Sergey Brin led the opposition, publicly moving out of state and donating $102 million to Building a Better California, a political committee he founded to oppose the tax. The group has served as a passthrough for other billionaire donors to oppose Prop. 40.

Prop. 41 was rejected by voters 52.5% to 47.5%. It would have prohibited the state from collecting taxes that circumvent the state spwending limit set in 1979, which Prop. 40 was designed to do. It also would have required the state to audit future tax proposals before they reach voters and identify potential spending cuts in the programs they’d fund.

Prop. 42 prohibits the state from taxing financial assets, private businesses, pensions and other forms of wealth. It also prohibits retroactive taxes. These provisions directly conflict with the billionaire tax.

The state constitution dictates that when there are multiple competing ballot measures on the same ballot, the one that receives the most votes wins, nullifying its competitors.

Allegations against SEIU leader

Prop. 40 was the brainchild of Dave Regan, president of Service Employees International Union-United Healthcare Workers West. He has been mired in scandal in recent months.

Some members of SEIU California, the political umbrella organization representing the healthcare workers union, have accused him of threatening and intimidating women over the years and of attempting to “extort” support for the measure, according to an internal investigation commissioned by SEIU California and SEIU, the union’s national parent organization.

Separately, the California Primary Care Association, which represents clinics and opposes Prop. 44, another ballot measure run by Regan’s union, alleged in a recent lawsuit that the health workers union violated anti-racketeering laws in part by asking clinics to support the billionaire tax in exchange for killing the clinic initiative.

The union and Regan have called these allegations “categorically false” and characterized them as a “smear campaign” designed to derail the billionaire tax.

STATEWIDE BALLOT MEASURES
Early, unofficial returns

Prop. 1 Issue $11.25 billion in bonds for multi-family housing, youth housing and veterans’ home loan subsidies
59.4% Yes   40.6% No

Prop. 2 Increase budget stabilization account to 20% from 10%.
60% Yes   40% No

Prop. 3 Renew 2012 income tax for education and early childhood programs
58.9% Yes   41.1% No

Prop. 4 Allow public funding of political campaigns
48% Yes   52% No

Prop. 5 Eliminate successor elections to fill seats left vacant after recall
50.5% Yes   49.5% No

Prop. 37 Issue $25 billion in bonds to fund second mortgage homebuyer program
60.9% Yes   39.1% No

Prop. 38 Issue $8.4 billion for immunology and immunotherapy research
56.9% Yes   43.1% No

Prop. 39 Require government-issue for citizenship proof for Voter ID
40.3% Yes   59.7% No

Prop. 40 Levy special one-time 5% tax on billionaires to fund health care programs
43.6% Yes   56.4% No

Prop. 41 Require revenues from new special levy to be spent on low-performing programs.
47.5% Yes   52.5% No

Prop. 42 Prohibit use of new special levy on retirement or savings
54.5% Yes   45.5% No

Prop. 43 Require ⅔ public vote for new local tax levies
45.3% Yes   54.7% No

Prop. 44 Prohibit from spending less than 90% on mission-related activities
17.5% Yes   82.5% No

Prop. 45 Establish guidelines for local governments to solicit public comments on essential projects. 45.6% Yes   54.4% No

Kristen Hwang, a reporter with CalMatters, contributed to this report.