Here's the lowdown
California Proposition 40 would impose a one-time tax equal to 5% of net worth on people who were state residents on January 1, 2026 and held more than $1 billion in assets.
Affirm co-founder Max Levchin says the bill could force him to sell founder shares with enhanced voting rights, even though he has never sold those shares before.
The state expects tens of billions of dollars in temporary revenue, but also says departures and other responses could reduce ongoing income-tax collections by less than $1 billion a year.
Max Levchin has a billionaire's balance sheet and a much more ordinary problem: the bill may arrive in cash while most of his fortune sits in stock.
The Affirm co-founder says California's Proposition 40 could force him to sell founder shares for the first time. He also says he would probably leave the state if voters approve it.
California wants to tax wealth, not just income. Valuable shares do not automatically come with cash to pay the bill.
A 5% bill based on one day
California's official voter guide says Proposition 40 would apply to billionaires who were California residents on January 1, 2026.
The tax would equal 5% of net worth and would be due in 2027. Real estate, pensions, and retirement accounts generally would be excluded. Taxpayers could spread payments over five years, but they would pay more for that option.
This is not a new annual tax. It is a one-time levy tied to a residency date and a snapshot of wealth.
Moving after January 1 would not erase the proposal's residency test, though leaving could affect future California income taxes.
Voters decide on November 3. The measure needs a majority to become law.
The balance sheet is not the bank account
Levchin helped create Affirm in 2012. The buy-now-pay-later company is now worth nearly $25 billion, and his holdings include shares with stronger voting rights.
Those shares can make him wealthy on paper and help him keep influence over the company. They do not pay a wealth tax bill by themselves. To raise cash, he may have to sell shares that he says he has never sold before.
The math is simple even when valuation is not. A person with $2 billion of taxable net worth would face a $100 million levy before the extra cost of a five-year payment plan. The example is hypothetical, but it shows the liquidity problem.
Founder stock makes valuation messy
A market quote does not settle every wealth tax question. Share classes can carry different voting power, while debt and other holdings change net worth. Advisers would need a defensible asset inventory, valuation dates, ownership records, residency evidence, and cash-flow models.
The state wants a temporary pool of cash
The official Proposition 40 summary says the wealth tax would raise tens of billions of dollars over several years. Ninety percent would fund public health care. The rest would go to education, food assistance, and administration.
Leaving creates another revenue question
Levchin says he loves California but would probably leave if the measure passes. He expects Affirm to keep its San Francisco office.
A founder can change personal residency without moving the whole company on the same day. The state has already built some departure risk into its estimate. Its voter guide says responses such as billionaires leaving could reduce ongoing income-tax revenue by less than $1 billion per year.
Proposition 40 trades a large but temporary collection for the chance of a smaller, lasting leak in annual revenue. Will that trade work? It depends on how much California collects and how many people change behavior.
Accountants should model the mechanics, not the politics
Here's the thing: clients do not need advisers to predict the election. They need clean scenarios based on January 1 residency, taxable net worth, the 2027 due date, and the five-year payment option.
Then ask three questions. How much wealth tax could be due? Where would the cash come from? What would a sale, loan, gift, trust change, or move do beyond this bill?
Each choice can affect control, capital gains, estate planning, disclosure, and future state taxes.
Bottom line: Levchin gives Proposition 40 a famous face, but the problem is broader. Net worth, taxable value, available cash, and voting control are four different numbers.
If it passes, California's billionaires will need to reconcile all four before the bill comes due.
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