The proposal, backed by the Service Employees International Union Healthcare Workers West and branded as a "billionaire tax", would impose a one-time 5% tax on individuals whose net worth exceeds $1 billion and who were living in the state as of Jan. 1, 2026. The goal is to generate $100 billion in revenue, mainly to fund the state's Medicaid system after federal cuts.
Democratic Gov. Gavin Newsom and many traditional allies of the union oppose the measure. They argue it is a temporary fix for an ongoing problem and that it would push the ultrawealthy to leave the state, taking the money they would contribute in income taxes with them. Newsom, who is considering a presidential run as he prepares to leave office in January, has generally opposed tax increases during his time as governor.
A coalition of healthcare, education and housing groups — including the California Medical Association and California School Boards Association — banded together last week to fight the tax.
Brian Brokaw, a Newsom political adviser who is leading a political committee opposing the tax, said it would "make California's biggest challenges worse."
Under the proposal, the state would spend the money generated from the tax over multiple years. The nonpartisan Legislative Analyst's Office estimates that the proposal would generate tens of billions of dollars in the first few years, but that income tax revenues would subsequently decline by hundreds of millions of dollars annually.
Since the proposal was announced in October, Google co-founder Sergey Brin has donated $82 million to a political committee called Building a Better California that backs a variety of initiatives designed to blunt the billionaire tax proposal. It has raised more than $118 million, counting Brin's contributions, from fewer than a dozen donors.
The union offered to scale back its proposal last week, asking Newsom to back a 2% tax on billionaires instead. But the governor's office said the lower rate didn't change his stance.
"There's kind of a perfect storm that sort of bolsters preexisting inclinations to be sympathetic to the idea of raising taxes on the well-to-do," he said.
But there's a catch. Support for ballot initiatives often declines as the election nears, and if the measure passes, it's likely to face legal challenges, Gilens said.
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