Key facts
- California voters will decide in November on a proposed one-time 5% tax on individuals with a net worth exceeding $1 billion.
- The measure, backed by the Service Employees International Union Healthcare Workers West, aims to generate $100 billion for the state's Medicaid system.
- Governor Gavin Newsom and many allies oppose the tax, arguing it will harm the state's economy and revenue base.
- Tech billionaires, including Sergey Brin, have spent millions to oppose the measure.
- If passed, the measure is likely to face legal challenges.
California voters will decide in November on a controversial proposal to temporarily raise taxes on billionaires, following the failure of negotiations between proponents and Governor Gavin Newsom. The measure, backed by the Service Employees International Union Healthcare Workers West, would impose a one-time 5% tax on individuals with a net worth exceeding $1 billion who reside in the state as of January 1, 2026. The union aims to generate $100 billion to fund the state's Medicaid system, particularly after anticipated federal cuts.
Governor Newsom and many of the union's traditional allies, including the California Medical Association and California School Boards Association, oppose the measure. They argue it represents a temporary solution that could destabilize state revenue by encouraging the ultrawealthy to leave California and take their income tax contributions with them. Newsom's political adviser, Brian Brokaw, stated the tax would worsen California's challenges and leave its residents with the consequences of a "one-time grab."
The nonpartisan Legislative Analyst’s Office estimates the proposal would generate tens of billions in its initial years, but anticipates a subsequent annual decline in income tax revenues by hundreds of millions of dollars. Many Silicon Valley tech moguls, who oppose the measure, have already relocated assets or threatened to do so. Sergey Brin, co-founder of Google, has donated $82 million to an opposition committee, which has raised over $118 million from fewer than a dozen donors. California's economy heavily relies on its top 1% of earners for nearly half of its personal income tax revenue.
Political science professor Martin Gilens of UCLA noted that the proposal resonates with Democrats concerned about affordability, income inequality, and federal program cutbacks. However, he cautioned that support for ballot initiatives can wane as elections approach, and the measure is likely to face legal challenges if approved.