Wealth tax criticized by billionaires and Gavin Newsom would levy a one-time 5% tax on residents worth over $1bn
A popular proposal in California to impose a wealth tax on billionaires has gained enough signatures to qualify for the ballot in November, state officials announced on Wednesday.
The news is set to intensify an already heated debate around the tax, which has pitted tech moguls and the state’s governor, Gavin Newsom, against the labor union backing the measure.
The California Billionaire Tax Act, colloquially known as the billionaire tax, would levy a one-time 5% tax on any California resident worth more than $1bn. The proposal is backed by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) as a means of funding California’s strained healthcare, food assistance and education programs.
The proposal has become one of the state’s biggest political flashpoints. As it gained popular momentum throughout the year, it’s also prompted prominent billionaires, such as Google co-founder Larry Page and Meta co-founder Mark Zuckerberg, to make moves to cut ties with the state and Newsom vowing to block it from going to a vote. Although it has gained enough signatures for the ballot, the coalition backing the measure has until 25 June to decide whether to move forward or potentially strike a deal.
While the union that floated the proposal has framed it as a way of getting the ultra-rich to pay their fair share, many of the state’s tech elites have condemned the tax and spent millions attempting to crush it. Google co-founder Sergey Brin has spent at least $82m alone on efforts to fight the tax and has relocated just over the California border to the Nevada side of Lake Tahoe.
Palantir co-founder Peter Thiel, former Google CEO Eric Schmidt, crypto billionaire Chris Larsen and DoorDash CEO Tony Xu are among other tech moguls who have donated millions to oppose the tax. California has the most billionaires out of any state – more than 200 – many of whom have increased their wealth in recent years amid the AI boom.
Notably, billionaire Jensen Huang, the CEO of Nvidia, has said he’s fine with the proposed tax and that he chose to live in Silicon Valley. During a talk at the Stanford Graduate School of Business in April, he said: “I say to everybody: ‘Move to California. Don’t leave.’ It’s the highest taxes in the world, but it’s OK.”
The proposed billionaire tax began to gain steam at the beginning of the year as the campaign sought to gather enough signatures to make it on to the November ballot. By late April, the SEIU-UHW said it had already filed more than 1.55m signatures – more than double the necessary amount and something the union has pointed to as testament to the popularity of the proposal.
On Thursday, the union announced it can now officially advance toward the November ballot.
“With today’s news, David won the second round against Goliath, but healthcare workers and our allies won’t quit until we protect patients from the looming California healthcare collapse manufactured by Trump and Congress,” said Debru Carthan, a spokesperson for the Billionaire Tax Now coalition.
The next step is for California’s secretary of state to confirm the measure by the 25 June deadline, which would officially certify it for November. The SEIU-UHW has the option, however, to withdraw it before next week. And this is where Newsom is stepping in.
The tech-friendly governor has long vowed to fight the measure. His spokesperson told the Guardian in January that he has consistently opposed such state-level wealth taxes, saying they “drive a race to the bottom”. He has publicly said that the tax would chase billionaires out of California and strip the state of revenue. Newsom is now reportedly whipping together a coalition to help him negotiate a deal with the union.
“From the get-go, SEIU-UHW has designed this measure as a ‘gun-behind-the-door’ to negotiate a better deal,” said David McCuan, a political science professor at Sonoma State University who studies the California ballot measure process. “Rather than go to the ballot and go nuclear in a ballot measure battle that can cost hundreds of millions of dollars, the goal has been to threaten to go to war.”
While several local unions and lawmakers, including California congressman Ro Khanna, have joined the coalition to support the billionaire tax, powerful organizations in the state have also stepped in to oppose it. Those include the California Teachers Association, the State Building and Construction Trades Council of California, the California Medical Association and Planned Parenthood Affiliates of California.
McCuan said that makes this week of capitol negotiations pivotal, adding that this isn’t the first time Newsom has waded into ballot measure campaigns. In 2024, the governor helped stave off several high-profile measures that had qualified for the November vote, including on issues like employer liability, children’s healthcare and oil drilling.
“Let’s see if that magic can be pulled off this time,” McCuan said, cautioning that the political climate is different this year with November shaping up to be the “mother of all midterms”.
“The stakes are much higher this time out,” he said.
The governor’s office declined to comment.
Source: Guardian - World News
