California’s tax billionaires are eligible to vote in November

from Kristen HuangCalMatters

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A union wants California billionaires to save the state’s health care system. Billionaires have other ideas.

On June 17, an initiative to tax the state’s wealthiest residents qualified for the ballot, according to the secretary of state’s office, which is verifying petition signatures.

Gov. Gavin Newsom, who has consistently rejected the idea of ​​raising taxes throughout his tenure, came out early as opponent of the proposed tax. Wealthy allies in Silicon Valley have joined the fray, armed with deep pockets and threats to leave the state, which depends disproportionately on high-income earners.

The union sponsoring the measure, Service Employees International Union-United Healthcare Workers West, says California needs the revenue the measure would generate to save the health care system from deep cuts the Trump administration made last year in the president’s tax reform package known as the “One Big Beautiful Bill Act.”

It’s Newsom reportedly trying to negotiate a last-minute deal that would have pulled the initiative before the vote was finalized on June 25.

What would it do?

The proposed initiative will impose a one-time 5% tax on California residents whose net worth exceeds $1 billion at the start of this year. The tax will hit roughly 200 people, and billionaires will be able to pay in installments over five years.

Supporters of the measure estimate it would generate $100 billion for the state. Proceeds will go into a special fund, with 90% reserved for health care costs and 10% for education and food aid programs.

The Legislature would control the funds and be able to allocate up to $25 billion annually to certain programs, including Medi-Cal and CalFresh.

A simple majority is needed to pass.

Who supports him?

The state’s largest health care workers’ union funded the measure, pouring more than $31 million into the campaign. “We are literally facing a collapse of our health care system here in California and elsewhere,” Dave Regan, president of SEIU-UHW, said in October when the campaign launched.

The union that is known for aggressively using electoral measuresargues that federal health care cuts will lead to hospital and clinic closings, poor patient access and thousands of lost jobs if the state doesn’t step in to fill tens of billions of federal dollars. The group also points out that Trump’s income, business and investment tax cuts disproportionately benefit wealthy people, who would then be subject to the proposed billionaire tax.

“Whether people support this or not, they cannot deny that these massive health care cuts are coming,” union spokesman Rene Saldaña said. “No one else has a solution to fill this massive $100 billion funding gap that California is facing.”

Saldaña noted that people who signed the petition for the initiative support and sometimes want the tax to be continuous rather than one-time.

“It’s popular. The public is feeling the pressure of their own health care costs,” she said.

The measure won broad support from Vermont Sen. Bernie Sanders and former Labor Secretary Robert Reich. Several local unions, as well as the Teamsters and AFSCME California, also supported the measure.

Who is against?

Newsom is not surprising and an outspoken critic of the proposal. He has long argued that increased taxes will drive wealthy people and businesses out of the state. In a recent appearance on Real Time with Bill Maher, Newsom claimed that “we’ve already seen dozens and dozens of people leave the state.”

Google co-founder Sergey Brin, with a net worth of $300 billion, according to Forbes, moved to Nevada because of the tax threat. Brin, a one-time supporter of liberal causes turned Trump supporter, is also the biggest spender among opponents. As of June 15, he has contributed $82 million to Building a Better California, which is funding a slew of countermeasures designed to nullify or weaken the initiative if it passes. However, the Commission has not taken a position on the wealth tax.

The first two measures — the Pensions and Personal Savings Protection Act and on Improving Transparency, Effectiveness, and Efficiency in the California Government Act — will also likely appear on the ballot in November. The retirement law would ban new state taxes on personal wealth, effectively repealing the billionaire tax, if both measures pass. The transparency law would require audits of government programs funded by special taxes.

Other tech and industry titans, including Google CEO Eric Schmidt, worth $43.3 billion, Kleiner Perkins Chairman John Doerr, worth $25 billion, and The Wonderful Company president Stuart Resnick, worth $5.4 billion, have donated millions of dollars to Brin’s committee.

Ripple Labs co-founder Chris Larsen, who is worth an estimated $12.4 billion, also launched Golden State Promise, a political action committee dedicated to directly opposing the tax initiative. Venture capitalist Ron Conway, who does not appear in the Forbes Billionaires Listfunded a third group, Stop The Squeeze.

Overall, opposition campaigns had raised $107.9 million as of June 15, according to campaign finance data.

Robert Lapsley, president of the California Business Roundtable, said one of the most troubling parts of the proposal is a provision that allows the Legislature to change the tax after passage. “They can change the level of taxation; they can change how often they are taxed; they can continue to reduce the level of income of those who pay them.” The union disputes that claim.

Progressive groups such as Planned Parenthood and the California Teachers Association have opposed the measure in recent weeks. Healthcare industry groups such as the California Medical Association, the California Primary Care Association and the California Hospital Association also oppose it.

What’s really going on with healthcare?

The “One Big Beautiful Bill” that Congress passed last year introduced a number of sweeping changes to Medicaid, the health insurance program for low-income and disabled people.

Over time, experts say the changes will dramatically reduce the number of people with publicly funded insurance through mandates such as work requirements and shorter eligibility periods. The law also limits federal spending on Medicaid. Because Medicaid programs draw on state and federal dollars, reduced enrollment or federal spending means less money for states like California.

The state Department of Health predicted early on that the federal cuts could cost California $30 billion a year. Approximately 14 million people rely on Medicaid, also known as Medi-Cal, in California.

State legislators have, too struggles with consistent budget deficits and rising program costs. Last year, Newsom and the Legislature limited Medi-Cal enrollment to low-income people without legal status. The state leaders are consideration of additional cuts this year to comply with new federal requirements.

Miranda Dietz, director of the Health Care Program at the UC Berkeley Career Center, said nearly 3 million Californians will lose health care over the next two years as a result of state and federal changes.

“The need for health insurance and health care is not going anywhere,” Dietz said.

What are the challenges?

If passed, the measure is certain to face legal challenges that could tie up potential revenue for years, experts say. The tax’s seemingly retroactive nature prompts a constitutional challenge, many say, albeit supporters dismiss these concerns. The initiative proposes taxing California residents starting Jan. 1, 2026, meaning those who left the state after that would still owe it.

Mark Peterson, a professor of public policy at the UCLA School of Law, said revenue from the initiative would “make a huge difference” in helping the state offset losses in federal funding, but that’s only if the initiative survives legal challenges and efforts by billionaires to move or hide assets.

Economists and government budget watchers are also cautious about the number of billionaires who have already left the statetaking their assets and business with them. Only six people moved out of the state last year before the proposed tax applied to them, but their combined value would have generated $27 billion for the state. Fortune reports. Others, including Meta CEO Mark Zuckerberg, worth $231 billion, have too reportedly moved out but not before January 1.

On the other hand, there is still no evidence that a majority of the state’s 200 billionaires are leaving. Some, including former gubernatorial candidate and billionaire Tom Steyer, have said they support the proposal.

Early polls show 50 percent of voters support the initiative, with most strongly supporting it, according to UC Berkeley Citrin Center for Public Opinion Research – POLITICO survey. But that’s not as strong a position as it might seem: 54 percent of voters are concerned about wealthy people leaving the state, and 63 percent are concerned they’ll take their businesses with them. A UC Berkeley Institute for Government Studies Poll – Los Angeles Times from March showed a similar split among voters with 52% support.

In general, get-out-the-vote campaigns want their early votes to be much higher because support almost always declines as the election approaches.

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.