California Considers New Tax for Billionaires
This proposal, called the 2026 Billionaire Tax Act, would create a one-time tax for about 255 billionaires. Instead of taxing yearly income, the tax would be 5% of their total wealth—things like stocks, businesses, art, and collectibles, but not real estate or some pensions.
Supporters say this measure is important because the wealth of billionaires has grown much faster than regular wages in recent years.
Omar Ocampo, a supporter, told CBS News that “the billionaire class had their wealth nearly triple in the last six years,” and that a 5% tax would not seriously affect their lives or spending.
However, critics worry this tax could make the richest Californians leave the state, which might hurt the state budget. Governor Gavin Newsom has expressed doubt about the idea, saying it is “going nowhere in California.”
Billionaire investor Bill Ackman also criticized the proposal, saying wealth taxes can create unexpected problems and have failed in other countries.
How Would the Billionaire Tax Work?
The plan was created by SEIU-UHW, a large health care workers’ union in California. If passed, billionaires would pay the tax in 2027, but they could spread out the payments over five years.
If the payment takes more than one year, there would be an extra yearly charge.
Most of the money raised—about 90%—would go to health care programs. The rest would be used to help with food assistance and education.
Supporters say the tax could help fill gaps caused by federal spending cuts that could cost programs like Medi-Cal billions of dollars.
Experts believe this new tax could raise tens of billions, though the amount is uncertain because markets can change and people may react differently.
To get the measure on the November ballot, supporters need to collect about 875,000 signatures from voters.
While some famous billionaires have moved out of California recently, studies show that most wealthy people don’t leave a state just because of taxes.
Whether billionaires would act differently if this tax passes is still an open question. This proposal has brought new attention to the debate about taxing the richest Americans.
-
Read next: Tax Holidays: Temporary Relief or Just a Spending Shift?
