Will California tax its billionaires?

There are more than 200 billionaires in California. Now, Golden State labor leaders are pushing for tax on that wealth to help pay for education and Medicaid funding shortfalls.

California lawmakers have “never successfully passed a wealth tax,” said CalMatters. Instead, the state taxes its richest citizens on their income. That would change under a new union-led proposal to create a “one-time 5% tax” on “everything from investments to property value,” as well as “other assets, like jewelry and paintings.” This alarms critics.

The wealth tax could eventually “come all the way down to the middle class,” said Susan Shelley, a spokesperson for the Howard Jarvis Taxpayers Association, to CalMatters. But California is facing a “collapse of our health care system” thanks to federal budget cuts, said Dave Regan, the president of Service Employees International Union-United Healthcare Workers West, to CalMatters. A tax on billionaires is the “only solution anyone can see.”

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Opening the door?

The California proposal is the “first politically viable wealth tax,” Harold Meyerson said at The American Prospect. The purpose is to address a “crisis for many Medicaid recipients.” It has “greater significance” at a moment when the “fortunes of the very wealthy are reaching stratospheric levels,” while middle-class Americans see their incomes stagnate. The tax would be imposed just one time, but it “opens the door” to other efforts to rein in the runaway accumulation of power and wealth by the “very, sometimes obscenely, rich.”

A wealth tax is a “portent of what’s to come” if Democrats return to power in Washington, Allysia Finley said at The Wall Street Journal. The party sought such a tax to finance Joe Biden’s “Build Back Better” bill in 2021 and might have succeeded “if not for opposition from Democrats Kyrsten Sinema and Joe Manchin.” Those two are no longer in the Senate.

California Gov. Gavin Newsom is likely running for president, and he has opposed a wealth tax in his own state. “Would he oppose a national one if he wins” at a national level? Probably not. “Who doubts that Democrats will seek to sock Americans with higher tax bills to pay for their entitlements?”

The real problem is the “Trump administration’s massive planned reduction in Medicaid funding,” Mark Kreidler said at Capital & Main. Addressing that issue is more important than worrying whether California billionaires can handle a “one-time tax on a fraction of their collective wealth.” The proposal will get “plenty of pushback,” including from Newsom, but the bigger question is addressing an “existential threat to the collective well-being of the Golden State.”

Gathering signatures

The tax would apply only to the 2025 net worth of California billionaires who have a “combined wealth of nearly $2 trillion,” said Axios. Because it would apply to their total wealth, “billionaires wouldn’t be able to avoid the tax by moving assets outside California.” Advocates must gather more than a half-million signatures to place the measure on the state’s 2026 ballot. If approved, billionaires will have five years to pay their bill.