California Billionaires Face One-Time 5% Tax

Working families in California will vote in November on a plan that could require the state's wealthiest residents to pay billions of dollars toward public healthcare. Proposition 40 proposes a single 5% tax on the net worth of every individual living in the state with assets of at least one billion dollars. If passed, this levy would be the first of its kind in the world, targeting the extreme upper end of the wealth distribution.

Proponents argue the measure is a necessary emergency response to federal cuts. Suzanne Jimenez of the Service Employees International Union-United Healthcare Workers West described the plan as a short-term solution. She warned that without action, the state's healthcare system could collapse while lawmakers search for long-term funding sources. The tax is designed to raise approximately $100 billion to offset reductions caused by recent federal tax and spending legislation.

The state presents a complex economic picture. California has the largest economy in the United States and the fourth largest globally, surpassing nations like India and the United Kingdom. Despite this wealth, it also has the highest number of homeless people in the country and one of the widest gaps between the rich and the poor. Francesco Trebbi of the University of California, Berkeley, noted that the tax targets a very small percentage of the population but reflects a broader desire to rebalance the economic scale.

Opposition is led by Governor Gavin Newsom, whose term is ending. He argues the tax may drive wealthy residents and their income tax revenue out of the state. Several billionaires have already left, including Google co-founders Larry Page and Sergey Brin, as well as Peter Thiel, Travis Kalanick, and Don Hankey. Hankey told Forbes he moved to Nevada because the proposal made him feel unwelcome. Mark Zuckerberg has also told Meta's board he is considering a move, with the company agreeing to a stock deal to help cover his potential tax bill of up to $12.5 billion.

Supporters among the wealthy include Nvidia chief Jensen Huang, who told CBS that he does not mind paying higher taxes as his income grows. Senator Bernie Sanders rallied in Los Angeles, predicting that voters would send a strong message to billionaires on November 3. He criticized the wealthy for believing they have a divine right to rule. A September poll by the Los Angeles Times and the Berkeley Institute of Governmental Studies found 45% of likely voters in favor, 42% opposed, and 13% undecided.

The tax would apply retroactively to anyone who lived in California with a net worth of at least $1 billion as of January 1, 2026. While some wealthy individuals support the measure, others like DoorDash co-founder Andy Fang have called it stupid. The debate comes as national inequality reaches its highest level in over three decades, with the top 1% of households holding nearly 32% of wealth in the third quarter of 2025.

Other states are also considering similar measures, such as Washington's proposed 9.9% tax on income over $1 million. Experts note that wealth taxes are rare in the United States, though they persist in a few European countries. Kristian Niemietz of the Institute of Economic Affairs called such levies more trouble than they are worth, highlighting the ongoing tension between revenue needs and economic mobility.