A proposed ballot initiative in California seeks to implement a one-time 5% tax on the net worth of the state's approximately 200 billionaires, applying to assets exceeding $1.1 billion. The tax would be retroactive to January 1, 2026, for California residents and is projected to generate up to $100 billion, with 90% allocated to healthcare and 10% to education and food assistance. Supporters, primarily the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), argue this funding is crucial to offset federal Medicaid cuts made during the Trump administration.
The proposal has ignited significant debate within California's Democratic party. Governor Gavin Newsom, a potential 2028 presidential contender, opposes the tax, fearing it could drive wealthy individuals and businesses out of the state, negatively impacting California's budget. Other prominent Democrats, including former Rep. Katie Porter, former Los Angeles Mayor Antonio Villaraigosa, and former U.S. Health Secretary Xavier Becerra, also share Newsom's concerns. Backers like Rep. Ro Khanna and gubernatorial candidate Tom Steyer, along with Senator Bernie Sanders, support the measure, viewing it as a way to address income inequality.
Polling data indicates a divided electorate. A March survey found 72% of California Democrats support the tax, while 72% of Republicans oppose it, leading to an overall support of 52%. However, voters also express concerns, with 54% worried about wealthy individuals leaving and 63% concerned about businesses relocating. Opponents, including a coalition of various labor unions, business groups, and medical organizations like the California Medical Association, also acknowledge the need for healthcare funding but believe the tax is a short-term solution that could destabilize the state's finances. Billionaire Peter Thiel has already contributed $3 million to a committee opposing the tax. Supporters proposed a compromise of a one-time 2% tax, but Newsom has not acted on it.
The initiative gathered enough signatures to qualify for the November ballot as of June 17. If passed, it would likely face legal challenges due to its retroactive nature. The projected $100 billion in revenue could provide a substantial boost, but analysts warn of the potential for a significant loss of tax dollars if billionaires relocate. Another proposed initiative, the "Taxpayer Protection and Efficiency in California Government Act," if passed, could effectively cancel the billionaire tax by prohibiting new state taxes on personal property. This complex situation presents a challenging political landscape for Governor Newsom, who is striving to balance the state's budget and potentially prepare for a presidential run.
