The anti-billionaire movement has taken hold in California, where voters provided enough signatures to force a landmark ballot initiative that would levy a one-time, 5% tax on the state’s richest residents.
Come November, California voters will get a chance to decide whether to literally tax the rich. The 2026 Billionaires Tax Act would impose the 5% levy on taxpayers and trusts with assets greater than $1 billion, including business interests, securities, cryptocurrency, vehicles, artwork and intellectual property.
The money would be used mostly to fund the state’s Medicaid program, which proponents say has been hurt by federal cuts under the Trump administration and is poised to lose $19 billion in annual federal funding.
A smaller portion of the funds would be dedicated to public education.
More than 900,000 voters are estimated to have signed the petition to qualify the tax for the November ballot, signaling a growing public anger over the so-called wealth gap as everyday Americans struggle to pay higher costs.
If the ballot measure succeeds, supporters are ready to test other states with similar initiatives while Democratic lawmakers prep federal wealth tax legislation.
“If this passes, it can be a model for states around the country to do what’s right,” said leaders at Our Revolution, a democratic socialist political action group.
Several states, including Washington, Maryland, Massachusetts and Minnesota, have imposed taxes on millionaires or are weighing similar legislation.
But no state has gone as far as California’s ballot initiative, which, if passed, would impose the tax on billionaires retroactively to Jan. 1, 2026, forcing even those who have moved out of the state in the past year to fork over a significant chunk of their wealth.
The tax would bring in “tens of billions of dollars” over a period of several years beginning in 2027, the state’s Legislative Analysts’ office estimated.
Critics warn a billionaire’s tax will drive out the state’s wealthiest residents and harm long-term tax revenue, but their concerns have been drowned out by the growing populist opposition to the nation’s richest Americans.
A poll taken earlier this year by the Economist and YouGov found 80% of Americans believe the wealth gap between the rich and poor is either “a very big” or “somewhat big” problem. In the same poll, 62% said billionaires aren’t taxed enough and nearly 60% said the government “should try to reduce wealth inequality.”
When broken down by party, it’s mostly Democrats who want to tax billionaires, which aligns with efforts by California and other blue states to tax their richest residents. The anti-billionaire sentiment is echoed on Capitol Hill among leading liberal lawmakers who are pitching national wealth taxes.
Sen. Bernard Sanders, Vermont independent, has pounced on public discontent with billionaires, whom he once said “should not exist.”
Mr. Sanders introduced a wealth tax in March that would zing the nation’s 938 billionaires with a 5% annual federal wealth tax.
The money would be spent, in part, on direct payments of $3,000 “to every man, woman and child” in households making $150,000 or less. It would amount to a $12,000 payment for a family of four, the democratic socialist said.
“In a democratic society, we cannot tolerate 60% of our people living paycheck to paycheck — struggling to pay for housing, food and health care — while 938 billionaires have become $1.5 trillion richer,” Mr. Sanders said.
A half dozen of California’s estimated 200 billionaires, and their estimated $700 billion in wealth, have already fled the state ahead of the Jan. 1 cutoff, which will cut estimated revenues from the tax by more than $25 billion, according to the National Taxpayers Union Foundation.
More are likely to flee, the NTU said. “Concerned billionaires who missed the January 1 deadline still have a strong incentive to get out of the state as soon as possible, as a court decision striking down the retroactivity provision could wipe away tax bills from those who leave soon,” NTU’s Director of State Policy Andrew Wilford said.
California Gov. Gavin Newsom and both candidates running to replace him, Democrat Xavier Becerra and Republican Steve Hilton, oppose the tax, citing concerns it will hurt the state’s economy.
The health care union that filed the ballot initiative has brushed aside those concerns as overblown.
The SEIU United Healthcare Workers West estimated the tax would generate $100 billion and that most billionaires would not bolt from California. Even if every one of them left the state, proponents Emmanuel Saez and Gabriel Zucman wrote in a May 26 New York Times op-ed, the one-time “trailblazing wealth tax” would make up for the loss in other tax revenue for the next 25 years because billionaires currently pay “such a low tax” on their net wealth.
Sonoma State University political science professor David McCuan said proponents of the billionaire’s tax want to avoid having to spend hundreds of millions of dollars convincing voters to back the measure, which will be among up to 20 initiatives on the California ballot.
“Crowded ballot, crowded airwaves, voters being inundated,” he said. “There is some time to watch here on this measure.”
The “Billionaire Tax Now Coalition,” which includes the SEIU and other proponents, wrote to Mr. Newsom on June 18 offering a compromise: Agree to a 2% tax on billionaires and they’ll drop the ballot initiative.
Mr. Newsom rejected the deal, calling the tax a “poorly designed measure” that will harm funding for teachers, schools, clinics and public safety.
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