Key facts
- California voters will consider a one-time 5% tax on billionaire net worth for residents with assets over $1 billion.
- A measure to raise the threshold for future local special taxes to two-thirds, instead of a simple majority, will be on the November ballot.
- Assembly Bill 736, which would have set a statewide ceiling on local transfer taxes at 1.5%, did not advance.
- Los Angeles's 'mansion tax' (Measure ULA) has been linked to a significant drop in higher-end property sales.
- Opponents of the billionaire tax fear it could lead to tax avoidance or residents leaving the state.
California is facing significant tax debates as voters prepare to decide on measures concerning a billionaire tax and local tax limits in November. The state is exploring "tax the rich" tools to fund social programs and housing, while anti-tax advocates seek to constrain these measures.
A compromise has led to a state constitutional amendment appearing on the November ballot, which would require a two-thirds threshold for future local special taxes, a change from the current simple majority. This follows the withdrawal of an initiative by the Howard Jarvis Taxpayers Association. Earlier, Assembly Bill 736, supported by California YIMBY and other housing groups, aimed to cap local transfer taxes at 1.5% but did not advance.
The debate is influenced by the performance of Los Angeles's Measure ULA, a "mansion tax" approved in 2022. This tax, which imposes a 4% levy on sales over $5 million and 5.5% on sales above $10 million, has been associated with a significant drop in higher-end property transactions, according to research by Professor Michael Manville of UCLA.
Simultaneously, a one-time 5% tax on the net worth of billionaires, defined as residents with assets exceeding $1 billion, will be on the ballot. Supporters argue it will fund essential services like healthcare and education, affecting very few taxpayers. Opponents, however, express concerns that such a targeted tax could encourage avoidance or prompt wealthy individuals to relocate, potentially destabilizing state revenue and investment.