California Considers Revised Billionaire Tax Proposal

A labor union in California has revised its proposal for a billionaire tax, shortly after it qualified for the November ballot. Initially, the Service Employees International Union Healthcare Workers West suggested a one-time, 5% tax on individuals with a net worth above $1 billion. However, the union now offers a 2% tax instead, seeking support from Governor Gavin Newsom. Newsom, however, remains unconvinced.

The original proposal has attracted criticism from various groups, including Gov. Newsom, who argues that even a revised 2% tax could harm essential services. “The Governor supports wealthier Americans contributing more, but this poorly designed measure will defund teachers, schools, clinics, and public safety,” said Tara Gallegos, Newsom’s spokesperson.

The proposed tax targets residents as of January 1, 2026, aiming to raise $100 billion. The revenue is intended to mitigate federal healthcare cuts for low-income individuals. Some funds would also support food assistance and education programs. Supporters believe that a 2% tax is manageable, allowing essential services like emergency rooms to remain open.

On Wednesday, Secretary of State Shirley Weber confirmed that sufficient signatures were gathered to present the original 5% proposal to voters. The debate around the tax is part of wider discussions in response to federal tax breaks and spending reductions. The proposal has sparked divisions among Democrats and labor unions, leading to significant campaigns opposing it.

Prominent progressives, such as Sen. Bernie Sanders, endorse the tax. However, opposition is strong, particularly from influential Silicon Valley figures and organizations like the California Medical Association and the California School Boards Association. These groups are actively campaigning against the measure.

In 2022, Newsom opposed another proposal to tax the wealthy, intended for funding electric vehicles and charging stations. Voters eventually rejected that measure. Critics worry the billionaire tax could drive the ultrawealthy out of California, reducing income tax revenue that funds nearly half of the state’s income.

Roger Salazar, spokesperson for the Golden State Promise, called the measure flawed and unsupportive of small businesses and working families. The Legislative Analyst’s Office estimated the 5% tax could generate billions initially but might later reduce income tax revenues by hundreds of millions annually.

Since the proposal emerged, Google co-founder Sergey Brin contributed $82 million to oppose the tax through the “Building a Better California” committee. Overall, the committee gathered over $118 million from fewer than a dozen donors.

Meanwhile, state lawmakers are finding alternative ways to raise revenue. Recent budget bills suggest extending a tax on healthcare providers. These measures are preferred by Gov. Newsom and legislative leaders. Senate President pro Tempore Monique Limón stated that the approved budget does not include the billionaire tax and aims to tackle the state’s structural deficit differently.