California’s billionaire tax divides liberal Democrats

from Maya S. MillerCalMatters

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Supported by the unions proposal to tax California’s billionaires health care funding has put some progressive lawmakers — and their labor allies — in a quandary.

Taxing the wealthy to make up for Trump-induced federal funding cuts may sound like a no-brainer to the left wing of a party that counts wealth inequality among its core concerns.

But despite the strong demonstration of support from prominent national figures, including Senator Bernie Sanders of Vermont and the liberal economist Robert Reich“The California Billionaires Tax Act of 2026.” became a hot potato for labor leaders.

The proposed initiative would impose a one-time 5 percent tax on any California resident whose net worth exceeds $1 billion, which would apply to about 200 people, according to Forbes. That money would plug an estimated $100 billion hole left by federal cuts to Medi-Cal and other social service programs.

Publicly prominent labor and progressive players have been largely silent, unlike Gov. Gavin Newsom, who made his disdain loud and clear. Still, in private conversations, some union leaders and their allies in the legislature oppose the measure. Of the critics who spoke to CalMatters for this story — three union leaders and five members of the legislative progressive caucus — only one lawmaker would criticize the measure openly.

Critics question its feasibility and whether the state even knows how to accurately estimate a billionaire’s total wealth, a crucial step in assessing how much tax they would owe. They fear long-term revenue loss by driving rich people out of California. And some resent that the union sponsoring the initiative, SEIU-United Healthcare Workers West, designed the measure to primarily benefit its members rather than boost the state’s general fund, where it can go for all budget needs.

“It’s not that taxing billionaires in and of itself is wrong,” said Keely Martin Bosler, a former chief budget officer for Newsom and former Gov. Jerry Brown. She is now a Democratic consultant who has advised several of California’s most influential labor groups, including the Service Employees International Union of California, the parent union of SEIU-UHW. “The way this tax is specifically constructed is problematic.”

Many progressive state legislators and Capitol heavyweights such as Sen. Scott Wiener of San Francisco and the powerful California Federation of Labor, have sidestep the question on whether they would support it, refusing for now to take a position on an initiative that has not yet officially been put up for a vote.

“The labor federation will not take it up for approval until July,” Lorena Gonzalez, the organization’s president, said in a text message.

Still, if the tax ends up on the ballot in November, as it seems likely, progressive critics will be tasked with the difficult optics of opposing — or at least not supporting — a measure that embodies one of the core tenets of their base: taxing the wealthy.

Even the mere threat that the measure could advance to the floor has already sparked a flood of opposition spending — totaling more than $50 million so far — from billionaires like Google co-founder Sergey Brin and cryptocurrency mogul Chris Larsen. Breen’s group, known as Building a Better California, also created three new competing measures designed to undermine the billionaire tax.

Critics fear that if billionaires like Brin become even bigger spenders in California politics, they could emasculate the progressive agenda by funding more business-friendly candidates and displacing left-leaning, labor-oriented lawmakers.

But supporters of the measure say they are undeterred by secretive detractors and challenge their critics to put their names behind their words.

“What we have is a group of so-called leaders who do not reflect the attitudes of their own constituents,” said Dave Regan, executive director of SEIU-UHW and the de facto leader of the billionaire tax measure. “That’s why they want to be anonymous.”

Regan said he is confident the initiative will gather enough signatures to advance to the ballot before the end of April. Then he said: “We believe that many of these people will come and change because it makes sense, because society supports, because their own members support.”

The arguments for and against the billionaire tax

Polls so far show the billionaire tax is relatively popular with voters. Recent surveys show just over half of Californians polled said they were likely to vote for him.

Critics point out that California’s existing state tax structure is based entirely on income, not net worth. The state would have to appraise each person’s assets, including real estate, art, cars, and private and public businesses. Billionaires can pay in installments, handing over 1% of their wealth annually for five years.

Bosler said that with income tax returns, the Franchise Tax Board can use data from federal tax returns to verify its own analysis. With no federal wealth tax, California would be creating uncharted territory without tax compliance support from another source or agency—a risky move that could trigger legal challenges.

“The state is not a miracle worker that they can’t suddenly do all of this perfectly,” Bosler said. “I mean they’re going to do their best, but I just think it’s expertise that they’ve built up over 50 years. None of that is in their wheelhouse at this point.”

But advocates of the tax say it’s the only real solution on the table so far to save hospitals, health care jobs and ultimately the lives of patients they say are at risk due to cuts in federal funding to the Medi-Cal and food assistance programs.

Supporters note that the tax is not intended to solve California’s structural budget problems.

“This is one-time funding to fill what we hope will be a one-time hole,” said Brian Galle, a tax law professor at UC Berkeley who helped craft the measure. Galle said only about 200 people would be subject to the tax, so the additional burden on the Franchise Tax Board would not be too great.

“It’s not like the FTB gets a blizzard of tens of thousands of new returns that they’re going to have to come up with a whole new data system to crack,” Galle said.

Why some progressives aren’t on board

Those with concerns about the initiative have largely kept their criticism under wraps.

One liberal state lawmaker, who spoke on the condition of anonymity, said infighting among unions is putting progressive lawmakers in a difficult position. While he sympathizes with the urgency felt by health care workers, he and other Democrats are not convinced the policy can withstand legal challenges and worry that the wealthy are using clever accounting maneuvers to avoid the tax altogether.

Some organizations synonymous with progressive politics in California, such as the Working Families Party, have also not taken a position, although other unions such as the Teamsters and AFSCME California support it.

Even the powerful SEIU California union is choosing not to take a position on the measure, which is spearheaded by one of its local affiliates, SEIU-United Healthcare Workers West.

MP Chris Wardmember of the progressive faction, called the measure “a well-intentioned effort by UHW” but criticized the proposal as just a one-time tax benefiting mostly the health sector, rather than increasing the state’s overall revenue. Regan said SEIU-UHW made the tax one-time to nullify the argument that it would drive billionaires out of the state.

Ward noted that he and his colleagues are considering “superb” bills, such as one that would close the corporate tax loophole to generate $3 billion a year and another that would create a new tax on corporations that pay workers so little that they qualify for Medi-Cal and food assistance.

Regan argued that these measures would only make California more unaffordable as businesses would pass on their increased costs to consumers.

Ward, the only state lawmaker who would honestly share concerns about the initiative with CalMatters, said he and his colleagues have heard pushback from “a number of other unions who don’t support this initiative,” mainly because their members won’t directly benefit from the revenue. Labor pooling, he said, is the key to any successful revenue solution.

“We need to look at a wealth tax for a wider range, including health workers, but other targets that are government priorities,” Ward said, “and that will be left off the table if that’s the only issue we see.”

CalMatters‘ Nadia Lathan contributed to this story.

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