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California voters will decide in November whether to impose a one-time 5% tax on billionaires under a ballot measure that supporters say could raise nearly $100 billion to help offset federal Medicaid cuts, despite opposition from Gov. Gavin Newsom and other world leaders.
The proposal would apply to California residents with a net worth of more than $1 billion as of Jan. 1, 2026. Under this plan, approximately 90% of the revenue will be directed to health care programs, with the remaining 10% earmarked for education and food aid.
Supporters of the measure, which they called the “Billionaire Tax,” celebrated it this week after it qualified for the November ballot, saying the proposal would help keep hospitals and emergency rooms open as California faces cuts to federal health care funding.
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California voters will consider a ballot measure in November that would temporarily raise taxes on billions. (Patrick T. Fallon/AFP via Getty Images/Getty Images)
Newsom, however, argued that the proposal is a temporary solution to a long-term budget challenge that could drive wealthy taxpayers out of the state and further destabilize California’s tax system. Democratic gubernatorial candidate Xavier Becerra and Republican Steve Hilton also voiced opposition.
A coalition of health care, education and housing organizations also warned the proposal could destabilize California’s finances by encouraging high-income residents to leave.
The proposal would impose a one-time tax of 5% on people with a net worth of more than $1 billion who lived in the state as of Jan. 1. 2026. (Photos by Mario Tama/Getty/Getty Images)
The nonpartisan Legislative Analyst’s Office estimates that the measure will generate tens of billions of dollars within the first few years, though it predicts that California’s personal income tax collections will later decline by hundreds of millions of dollars annually as taxpayers adjust their behavior.
California already relies heavily on high earners, with the top 1% of taxpayers accounting for nearly half of all personal tax revenue.
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The plan includes several provisions designed to address concerns about how billionaires will pay their taxes. Eligible taxpayers can choose to pay the debt in five annual installments, while certain people with illegal assets would generally be eligible for the deferment mechanism established under the proposal. The measure also contains anti-avoidance provisions aimed at preventing taxpayers from shifting assets or restructuring ownership to reduce their tax liability.
Gov. Gavin Newsom and many other traditional allies oppose the measure. (Justin Sullivan/Getty Images/Getty Images)
Opponents argue that Silicon Valley billionaires have already moved their assets or are threatening to leave California to avoid future tax increases.
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The union that supports the proposal, the Service Employees International Union-United Healthcare Workers West, has previously offered to reduce the tax rate to 2% in an effort to win Newsom’s support. According to CBS News, the governor’s office said the low rate did not change his opposition.
