Sponsors of a ballot measure in California that would place a one-time 5 percent tax on the wealth of the state’s billionaires, raising approximately $100 billion to offset devastating federal cuts to health care for the next five years, announced on Thursday that they would go forward to the statewide ballot this November.
The announcement came despite fierce opposition from, well, billionaires, as well as Gov. Gavin Newsom, who has sided with the 250 richest people in California and will now have to decide if becoming the public face of opposition to a tax on billionaires is something he wants to do before running for president in 2028.
Voters will also see two rival measures that would nullify the billionaire tax; they were funded by Google co-founder Sergey Brin and qualified for the ballot earlier this week. Under the rules guiding direct democracy in the state, in the event of competing initiatives, the successful proposition with the most votes would become state law.
Thursday was the last day that initiatives could be withdrawn in California, under a system that allows sponsors to negotiate with the legislature to either place substitute language on the ballot or arrive at a legislative solution. Neither side opted to do so.
“We are confident we will win,” said Debru Carthan, vice president of the Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which represents 120,000 health care workers in the state and proposed the ballot measure.
If successful, the measure would create the first wealth tax in the nation, albeit a temporary one.
The union has said that a wealth tax was the only solution anyone has proposed to avoid ER and hospital closures, a loss of coverage for 3.2 million residents, higher premiums, deductibles and co-pays for another 20 million, and 150,000 lost health care professional jobs. Medi-Cal, the state version of Medicaid, would see the lion’s share of the cuts.
“Gov. Newsom has no plan,” said Carthan at the press event. “He has no plan to stop emergency rooms from closing. He has no plan for your health care costs. He has no plan to make sure that your family doesn’t have to drive further and wait longer to get medical care.”
Opponents argue that the wealth tax would cause capital flight from the state, though it is based on residents as of January 1 of this year, and therefore any billionaires who left after the tax passed would still have to pay. California’s tax code is distorted and heavily dependent on receipts from wealthy individuals, so any capital flight could reduce regular revenues, opponents have said.
If successful, the measure would create the first wealth tax in the nation, albeit a temporary one. The surge of capital income and inequality over the past few decades has hived off trillions of dollars from taxation, as the wealthy use elaborate accounting strategies to keep their wealth out of reach.
Rep. Ro Khanna (D-CA), who appeared on the press call, made the point that stock markets are on target to increase by as much as 15 percent this year. Therefore, a 5 percent tax would still leave billionaires with a healthy annual gain. “This is a 90-10 issue among voters,” Khanna said, questioning why any Democrat would oppose it, a not-so-subtle reference to Newsom, a potential foe in a presidential nomination race.
SEIU-UHW spent $31 million on the signature-gathering effort for the billionaire tax and would likely need many times that to keep pace with the limitless pockets of the opposition. The union promised that 50,000 volunteers would work on the Yes campaign this fall, an enormous sum until you realize that would only represent 1 out of every 463 registered voters in the state. Still, if that materializes it would be one of the largest grassroots efforts in state history, if not the largest.
Beyond stating personal opposition, Newsom had been working over the last couple of months to peel off other unions and health care groups like Planned Parenthood and the California Medical Association, in an attempt to isolate SEIU-UHW and force them to give up on the billionaire tax.
Late last week, sponsors publicly presented Gov. Newsom with a compromise measure that would have lowered the tax on wealth to 2 percent, raising enough to offset the federal cuts from President Trump’s Big Beautiful Bill for only two years, a bridge to coming up with a long-term solution. But Newsom quickly rejected the compromise. “Changing the tax rate doesn’t change this measure’s fundamental flaws that harm working Californians.”
Sources told the Prospect that the union presented the compromise to Newsom shortly before making it public, but the response was swift. Dave Regan, president of SEIU-UHW, told reporters that there were never more than a couple of “cursory” negotiations between ballot sponsors and Gov. Newsom’s office. “What the governor made clear from the beginning is that he would not entertain any proposal or compromise that taxed billionaires,” Regan said.
Regan added that organizations that decided to fall in behind Newsom were not listening to their rank and file. “I think those organizations ought to check in with their own members,” he said in response to a question from the Prospect. “It’s a classic example of a handful of political actors acting against what their constituents want.”
Sponsors have claimed that the measure has double-digit leads in polling. But opponents are using a time-honored tactic in California: competing ballot measures that sow confusion and lead voters to throw up their hands and vote against everything.
The first poison-pill measure would prohibit any new state taxes on personal property, while the second, which is being sold as a transparency measure, would void any new taxes that did not adhere to a state spending rule called the Gann Limit; the billionaire tax would distribute extra funds above that limit to plug health care gaps. Brin has already given over $82 million to the group that put together the competing initiatives.
Suzanne Jimenez, chief of staff at SEIU-UHW, called the two poison pills “just bad policy … It’s sad to see the governor stand in line with billionaires like Sergey Brin, playing with such horrible policies designed to stop the Billionaire Tax.”
While many in the political establishment may have wanted the expensive fight to go away, it will now likely get the majority of the screen time in the state this fall, over the foregone conclusion of a governor’s race and even a handful of high-profile congressional battles. It also puts Newsom and other establishment Democrats in an uncomfortable position, having to align with billionaires who already received massive tax cuts from the Trump administration last year, at a time when the public is struggling to pay bills and strongly negative on oligarchical wealth.
SEIU-UHW says the cost of inaction is far too great, leading to a collapse of the state’s health system. Said Regan: “They always talk about California being the fourth-largest economy in the world. Well, the fourth-largest economy in the world should be able to maintain health coverage for 3.5 million people.”
David Dayen is the executive editor of The American Prospect. He is the author of Monopolized: Life in the Age of Corporate Power and Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud. He co-hosts the podcast Organized Money with Matt Stoller. He can be reached on Signal at ddayen.90.
Before you go.
I hope that you found this article interesting and thought-provoking. The reason we’re able to publish stories like this — free of programmatic ads and never behind a paywall — is because readers like you step up to support our work.
The Prospect doesn't answer to advertisers or billionaire owners. We answer to you and to our commitment to pursuing the truth, wherever that leads us.
Independent, reader-supported journalism is critical at a time when the free press is under assault.
If you believe this kind of reporting should exist and remain free to read, we hope you'll consider chipping in. Every contribution, however modest, makes a real difference.
David DayenExecutive Editor
