California voters will decide in November on a ballot measure that would implement a one-time tax on billionaires, a proposal backed by a labor union that aims to generate significant revenue for the state's Medicaid system.
The measure, supported by the Service Employees International Union Healthcare Workers West, seeks to impose a 5% tax on individuals with a net worth exceeding $1 billion who resided in California as of January 1, 2026. The union estimates this would generate $100 billion, primarily to offset potential federal funding cuts to the state's Medicaid program.
Despite pressure from critics to withdraw the proposal, the union announced it would proceed. Union President Dave Regan expressed strong support for the measure, calling opponents "totally out of touch."
However, the proposal faces significant opposition. Democratic Governor Gavin Newsom and a coalition of healthcare, education, and housing groups, including the California Medical Association and California School Boards Association, have voiced their opposition. Critics argue that the tax is a short-term solution that could destabilize state revenue and prompt wealthy individuals to leave California, thereby reducing income tax collections.
"The dangerous wealth tax directly threatens vital funding for education and schools, healthcare and clinics, public safety, and infrastructure projects by making California’s revenue even more volatile," the coalition stated. Brian Brokaw, a political adviser to Newsom leading an opposition committee, warned that the measure would "make California's biggest challenges worse."
The nonpartisan Legislative Analyst's Office projects that while the tax would generate tens of billions of dollars in its initial years, it could lead to a subsequent annual decline in income tax revenues by hundreds of millions of dollars. Many tech industry leaders, who are among those targeted by the tax, have already relocated assets or threatened to do so to avoid its impact. Some have contributed millions to committees working to defeat the proposal, including Google co-founder Sergey Brin, who donated $82 million to a committee backing initiatives to counter the billionaire tax.
California's tax revenue is heavily reliant on its highest earners, with the top 1% of earners contributing nearly half of the state's personal income tax revenue. The SEIU initially offered to reduce the proposed tax to 2% in an attempt to gain broader support, but the governor's office indicated this adjustment did not alter their stance.
The measure's timing aligns with growing concerns among Democrats regarding affordability, income inequality, and federal budget cutbacks. A political science professor at UCLA, Martin Gilens, noted that this environment could increase sympathy for tax increases on the wealthy. However, he also cautioned that support for ballot initiatives can wane as elections approach, and any passed measure is likely to face legal challenges.