A tax on billionaires could head to the California polls

from Kristen HuangCalMatters

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For years, Gov. Gavin Newsom has staunchly opposed raising taxes on wealthy Californians, even as the issue has repeatedly reared its head in recent difficult budget years. But faced with deep federal cuts to social service programs, labor and health groups are asking voters to bypass the governor — to tax a very small number of people.

The United Health Workers International Union of United Health Workers Los Angeles is asking voters statewide to approve “billionaires tax” to help maintain the state’s health and education systems.

The proposed ballot initiative would impose a one-time 5 percent tax on the state’s roughly 200 billionaires, generating roughly $100 billion in revenue, according to supporters.

Going to the polls is a common move for advocacy groups frustrated by Sacramento politics, which, while dominated by Democrats, can still be partisan. Dave Regan, president of SEIU-UHW, said at a news conference that the ballot initiative is “the only solution that anyone can see.”

“We are literally facing a collapse of our health care system here in California and elsewhere,” Regan said. “This will help us keep health care facilities open. It will stabilize premiums and coverage for all Californians, protect health care jobs, and improve public education.”

The proposed initiative would tax the net worth of billionaires residing in California for 2025, allowing them to pay off the obligation over five years. Proceeds will go into a special fund, with 90% reserved for health care costs and 10% for K-12 education costs.

874,641 signatures are needed to be placed on the 2026 ballot, a number the groups are confident they can reach. Getting voters to ultimately approve the tax, however, could prove difficult.

While California has taxed the income of millionaireslegislators never succeeded they adopted a wealth tax. Instead of targeting profits, the state would impose such a tax on a person’s net worth, everything from investments to real estate value and even other assets, such as jewelry and paintings.

The governor is a big reason for that. Sometimes Newsom never supported a wealth tax angrily dismissive conservative efforts to associate him with one as “shameful.” He canceled the latest legislative initiative last year.

Democratic lawmakers this year considered raising revenue to help support the state’s social service programs, which receive billions in federal funds a year, but have focused on Newsom’s 50 proposal to redirect the fight.

Regan said he has no plans to strike a deal with state lawmakers and pull the initiative from the ballot.

President Donald Trump’s comprehensive tax reform and budget bill — the One Big Beautiful Bill Act — is expected to cut nearly $1 trillion from Medicaid over a decade. California is estimated to lose about $30 billion in federal Medicaid funds annually as a result. The state Medicaid agency estimates that 3.4 million people will lose coverage as a result of federal eligibility changes.

Most of the cuts won’t take effect until 2027. But states, including California, are already taking steps to shrink their health insurance programs for low-income and disabled people.

California lawmakers, faced with a $12 billion deficit earlier this year, did cuts the state insurance program for undocumented immigrantsincluding a partial enrollment freeze that begins Jan. 1. They too reinstate the Medi-Cal asset testwhich limits how much enrollees can have in property value and savings.

Susan Shelley, vice president of communications at the Howard Jarvis Taxpayers Association, said most Californians are likely to assume the tax won’t affect them, but implementing a wealth tax in the state could set a troubling precedent.

“We tax income at a very high level, but we don’t tax wealth and assets,” Shelley said. Nearly half of the state’s income comes from personal income tax comes from only 1% of the state’s income. Over time, she added, the wealth tax “could reach the middle class and they say you have too much equity in your house and we take it.”

Shelley also said the proposed initiative would incentivize billionaires to leave the state, creating a “huge hole in the state budget” that would hurt the economy in the long run.

Proponents of the measure disagree with this characterization of the proposal. They said it would not impose taxes on the middle class, nor would it affect business as it targeted the net wealth of the ultra-rich.

Emmanuel Saez, an economics professor at UC Berkeley and a proponent of the proposal, said the tax is structured to prevent billionaires from avoiding the bill simply by leaving the state.

It would tax their wealth established in 2025, and any billionaires who move to the state in 2026 would be exempt from the tax.

“California billionaires will not be able to avoid the tax by moving their assets out of California,” Saez said.

Supported by the California Health Care Foundation (CHCF), which works to ensure that people have access to the care they need, when they need it, at a cost they can afford. Visit www.chcf.org to learn more.

This article was originally published on CalMatters and is republished under Creative Commons Attribution-NonCommercial-No Derivatives license.