California could introduce the world's first billionaire tax – the super-rich oppose it

California’s proposed billionaire tax is a one-time levy on total net wealth, not just annual income. It is called Proposition 40. If approved, it would apply to every billionaire living in California. The proposal matters because it would create the first billionaire tax in the United States and the world, according to the article.

The tax would take five percent of each affected person’s net worth. California has about 250 billionaires, so the measure targets a very small but extremely wealthy group. Its supporters say wealthy residents currently benefit from tax breaks and loopholes that can reduce their income-tax payments sharply.

Voters were due to decide the proposal in the November midterm elections. A late-September poll found 45 percent of likely voters supported it, while 42 percent opposed it. Texas took the opposite path in 2023 by adding a constitutional ban on taxing wealth in the future.

The proposed tax is large because it applies to wealth accumulated over a lifetime, rather than only to money earned in one year. Each billionaire living in California would pay five percent of their net worth once. The article describes the measure as a landmark test of whether wealth itself should be taxed.

California is home to about 250 billionaires, making them the proposal’s target group. For example, someone classified as a California resident billionaire would be included because of their total net wealth, even if their income in a particular year were low. The tax would therefore focus on assets and accumulated fortune.

The measure remained uncertain before the vote. In a poll conducted at the end of September, 45 percent of likely voters supported the billionaire tax and 42 percent opposed it. If approved, California would establish the first such tax in the United States and worldwide.

Supporters expect the one-time billionaire tax to bring in 100 billion dollars. The proposed sum is intended to strengthen healthcare for people with low incomes and protect services under financial pressure. That makes the tax more than a revenue measure: it is also a plan for directing extreme wealth toward medical care.

The main destination would be Medical, a healthcare program for low-income people. The money would also support local hospitals and clinics. The article links this need to federal funding cuts, which put more than three million Californians at risk of losing health insurance. Millions of others could see their premiums double.

Hospitals are also struggling. More than 400 California hospitals have already furloughed 3,400 workers, and 83 hospitals face closure. The final outcome depends on the November vote. If voters approve Proposition 40, its supporters intend the revenue to address these healthcare problems.

Healthcare workers and low-income patients support the proposal because California’s medical system is under pressure. Federal funding cuts have put more than three million Californians at risk of losing their health insurance. Millions of other patients could face insurance premiums that are twice as high.

The proposal would direct its expected revenue to Medical, a program for low-income people, as well as local hospitals and clinics. Jovana Sardonica says her parents may lose free or nearly free healthcare. She reports that their deductibles and prescription costs have already risen, showing how financial pressure reaches individual families.

Supporters also point to hospitals’ worsening condition. More than 400 hospitals have furloughed 3,400 workers, while 83 face closure. Healthcare workers’ union proposed the tax after earlier attempts in a somewhat different form. They see a one-time payment from billionaires as a way to preserve coverage and medical services.

Billionaires and opponents argue that California should not tax wealth alone. They fear wealthy residents could leave, move their money, or relocate companies to places with lower taxes. Their central concern is that the state might lose investment and business activity instead of collecting the expected revenue.

Google co-founder Sergey Brin is described as the loudest opponent. He and other billionaires have put more than 300 million dollars into the campaign against Proposition 40. Republicans, several Democratic politicians, and left-leaning interest groups also oppose the measure. They include Governor Gavin Newsom and both candidates seeking his position.

Newsom says wealthy people can move money to a state with the lowest tax rate for high earners. He argues that this fight should happen at the federal level instead. The opposition could influence voters before the November election, especially because the poll showed only a narrow three-point lead for supporters.

The article presents relocation as a major objection to the billionaire tax. Wealthy people may be able to move their money to another state with a lower tax rate for high earners. Opponents also warn that companies could move elsewhere. This possibility could weaken the tax’s financial and economic effects.

Gavin Newsom argues that rich residents can transfer money to states with lower rates, even though he says that should not happen. His position is that wealth taxation should be handled across the United States, rather than by one state. This would reduce differences between states and make relocation less useful, according to the argument described.

The article does not establish whether a mass departure would occur. It reports the warning as an argument used by opponents. The issue matters because supporters hope to raise 100 billion dollars for healthcare, while opponents say relocation could reduce the money collected and move businesses away from California.

Income tax is charged on money received or earned, such as wages or investment income during a period. Net-wealth tax instead targets a person’s accumulated wealth: the value of what they own after subtracting debts. Proposition 40 would use the second approach by taxing five percent of each California billionaire’s net worth once.

The article says billionaires theoretically pay a combined federal and state income-tax rate of 27 percent. California’s share is 14.3 percent, while the typical middle-income Californian pays 21–26 percent. These figures describe income tax, not a tax on total wealth.

Tax breaks and loopholes can allow superrich people to avoid income tax almost entirely, according to the article. That can happen when taxable income is much smaller than total wealth. The proposal’s supporters therefore want to tax the fortune itself. Opponents reject that approach and say the issue should be handled at federal level.