Proposed California billionaire tax sparks sharp reaction among elite, politicians
Could a billionaire tax go on California's ballot?
The organizers behind the effort of a billionaire tax will start to gather signatures this week needed to put the measure on the ballot. The tax is drawing sharp reactions among politicians and the state's wealthiest residents.
San Francisco - A proposed billionaire tax in California is setting up a high-stakes political fight over how to fund health care services, and whether taxing the state’s wealthiest residents could backfire in the long run.
A billionaire tax?
What we know:
The proposal, backed by SEIU–United Healthcare Workers West, would impose a one-time 5% wealth tax on California’s more than 200 billionaires, spread over five years.
Supporters say the measure could raise roughly $100 billion, with most of the money earmarked for health care programs affected by recent federal budget cuts under President Trump's One Big Beautiful Bill.
"We really looked at how do we impact the least amount of people. So we looked at those that are the most fortunate amongst us, and paying a very reasonable tax of 5%, ultimately it's 1% a year for the next five years, that is something that is very minimal to ensure that we have a functioning healthcare system," said Suzanne Jimenez, chief of staff for SEIU–United Healthcare Workers West.
If voters pass the initiative, billionaires in the state could opt to spread the payments across five years for an additional annual nondeductible charge of 7.5% of the remaining unpaid balance.
The union must collect about 875,000 signatures by April to qualify the measure for the November ballot. It started the effort this week.
Opponents, however, warn the tax could prompt wealthy residents and businesses to leave California, ultimately shrinking the state’s tax base.
San Jose Mayor Matt Mahan criticized the proposal, writing on X in part: "Driving billionaires out of state might feel good in the short run, but working people will pick up the tab," noting that roughly half of California’s income tax revenue comes from the top 1% of earners.
Governor Gavin Newsom has also expressed skepticism, saying the proposal would be difficult to implement, at a recent New York Times summit.
"You can’t isolate yourself from 49 other states," Newsom said at a recent summit. "You have to be pragmatic."
The state’s nonpartisan Legislative Analyst’s Office has warned that while the tax could generate a large short-term boost, revenues could decline over time if wealthy residents relocate.
"This Chicken Little argument that people are going to flee because of a tax, when we look at real-world examples, it doesn’t pan out," Jimenez said.
Some high-profile investors have publicly suggested otherwise.
Bay Area-based investor Chamath Palihapitiya wrote on X that people he knows with a combined net worth of $500 billion have already left the state, while billionaire Peter Thiel’s firm recently announced plans to open a Miami office.
Progressive Rep. Ro Khanna, who represents Silicon Valley, framed the proposal as a values issue, writing on X: "We believe billionaires can pay a modest wealth tax so working class Californians have the Medicaid your party cut." He was referencing Sen. Ted Cruz who wrote: "Please continue driving all the job creators out of California. If anything, 5% is too low. Why not 50%? Texans are enjoying the prosperity!"
If the measure qualifies for the ballot, voters will have the final say on whether California becomes the first state to adopt a billionaire wealth tax of this scale.