A union-backed proposal to impose a one-time 5% tax on California billionaires has gathered enough signatures to qualify for the November ballot, despite warnings from state leaders and fiscal analysts that it could trigger an exodus of wealthy residents and devastate state revenues. Secretary of State Shirley Weber, a Democrat, announced Wednesday night that petitioners have collected more than the roughly 875,000 signatures needed to place the measure before voters. The proposal will officially qualify June 25 unless proponents withdraw it.
The Tax Proposal
Backed by the Service Employees International Union Healthcare Workers West, the measure 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. Proponents claim the tax would generate $100 billion in revenue, primarily to fund the state's Medicaid system with additional money directed to food assistance and education programs. The union did not respond Thursday to a request for comment on the announcement that the proposal has secured enough support to qualify for the ballot.
The proposal comes as states debate how to respond to the major tax breaks and spending cuts legislation President Donald Trump signed last year. The measure has already divided Democrats and major labor unions while triggering an expensive campaign to defeat it. The proposed tax is backed by prominent progressives including Vermont Sen. Bernie Sanders.
Bipartisan Opposition Mounts
The measure has faced staunch pushback from Silicon Valley tech moguls as well as Democratic Gov. Gavin Newsom and prominent players in Sacramento. Opposition includes the California Medical Association and California School Boards Association, which helped launch a committee this week to oppose it. Newsom also opposed a ballot measure in 2022 to increase taxes on the wealthy, which would have funded programs that help people buy electric cars or install more chargers. Voters rejected it.
Critics say the measure would decrease state revenue over time by pushing the ultrawealthy to leave, taking the money they would contribute in income taxes with them. That would deal a huge blow to a state that relies on its top 1% of earners for nearly half of its personal income tax revenue. Roger Salazar, a spokesperson for Golden State Promise, said, "This flawed measure is the wrong approach for California's small businesses and working families."
Fiscal Analysis and Campaign Spending
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 could 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.
State lawmakers passed budget bills this week that aim to raise revenue in other ways, including by extending a tax on healthcare providers. Newsom and legislative leaders agree to this approach, Senate President pro Tempore Monique Limón said. Monique Limón said, "The budget, as approved by the Legislature and now being negotiated with the Governor, does not include the billionaire's tax." She added, "Instead, it reflects additional revenues to address our long-term structural deficit."
Why This Matters:
California's heavy reliance on its wealthiest residents for tax revenue makes this proposal particularly risky for the state's fiscal stability. With the top 1% of earners providing nearly half of personal income tax revenue, any measure that encourages their departure threatens the funding base for essential services. The nonpartisan Legislative Analyst's Office has already warned that while the tax might generate tens of billions initially, it could lead to hundreds of millions in annual revenue losses as high-net-worth individuals relocate to states with more favorable tax climates. The fact that both the governor and legislative leaders have pursued alternative revenue measures through the budget process suggests recognition that sustainable fiscal policy requires protecting the tax base rather than risking its erosion through punitive taxation that could backfire spectacularly.