A battle over a first-of-its-kind tax on billionaires is heating up in California, with tech moguls pumping millions of dollars into a campaign to defeat it and union leaders who support the measure insisting the state's very wealthiest residents should pay their fair share.
Voters in November will be asked whether to pass the ballot measure, known as Proposition 40, which imposes a one-time 5% tax on the assets of the nearly 250 billionaires in the state. Backers say the new revenue would mostly fund healthcare services.
The tax was envisioned by union leader Dave Regan, who said millions of the state's neediest patients could lose health insurance in the coming years, driven largely by President Trump's 2025 tax and spending bill. Dubbed by the White House the "One Big Beautiful Bill," the law slashes federal funding to California and other states.
"Proposition 40 was developed specifically to backfill those cuts from the One Big Bill that are scheduled to take effect in the next five years. It is a five-year solution to that plan," said Regan, who is the president of the SEIU United Healthcare Workers West.
If passed, the measure would direct 90% of the tax revenue to fund healthcare services and the other 10% to food assistance and public education across California.
"We're not even talking about the top 1%, we're talking about the top 0.0001%, the billionaires: 250 individuals in California, $2.4 trillion worth of wealth, and that's an amount of money equivalent to the annual income of all Californians who are not billionaires, including extraordinarily wealthy people," Regan said.
But the populist fervor fueling supporters of the measure is being met with a growing coalition of resisters, from tech billionaires to other unions and some state Democrats. That includes Democratic Gov. Gavin Newsom, who has said the tax would hurt the state's economy, which is powered by profitable tech companies in Silicon Valley that have spawned many of the billionaires who would be taxed under the measure.
Opponents of the tax argue it offers a short-term fix to a long-term problem and could ultimately backfire.
"I'm not against taxes. But this is not the right tool. What we need to develop is something that is stable and consistent," said René Bravo, president of the California Medical Association, in an interview with NPR. "Human beings need and deserve health care that is financed in such a way that you're not increasing the insecurity."
Bravo argues Proposition 40, if passed, would make patients more unstable by providing them with bridge coverage now, but no longer-term solution — making it difficult to plan out medical coverage over many years. Bravo also said he does not trust state lawmakers to spend most of the new revenue on healthcare, speculating that they could direct the money to other pet projects.
"Not accurate, not true," responded union leader Regan. He said voters face a choice between more immediate healthcare funding for Californians or none at all, and that a third way being proposed by some critics is not on the ballot.
Will billionaires leave California if wealth tax passes?
Another major rift between both sides of the fight is whether the first-of-its-kind state wealth tax would drive billionaires out of California.
It's a crucial issue, since California's Chamber of Commerce estimates 1% of the state's residents pay nearly 50% of all personal income taxes.
Few disagree that a mass flight of the ultra-rich would throw California's budget into a tailspin, but the measure has sparked a fierce debate about whether billionaires will actually pack up and leave the state.
French economist Thomas Piketty, who has written extensively about disparities in international wealth, has argued that what's known as "capital flight" is often overstated in debates about wealth taxes. "If one builds a fortune while relying on the country's infrastructure, education, and health systems, there is no reason that one should so readily escape the collective obligations that fund these systems," Piketty wrote last year about a proposed wealth tax in France aimed at the ultra-rich.
Adam Michel, who studies tax policy at the libertarian Cato Institute, believes taxing high income earners will be destructive for the state.
"A wealth tax of this magnitude will be bad for California and for California taxpayers. We should expect not just targeted billionaires to leave, but anyone that expects to be a billionaire or expects to be the target of aggressive taxes like this in the future to leave," he said.
Google co-founder Sergey Brin, one of the richest people in the world, agrees.
He has poured $102 million into a group known as Building a Better California, which he co-founded with former Google chief executive Eric Schmidt. The group has also received millions of dollars in funding from venture capitalist John Doerr, crypto executive Chris Larsen and others. Building a Better California's mission is to defeat the effort, in part by supporting a separate ballot measure that would invalidate the wealth tax. Other tech billionaires, including Palantir founder Peter Thiel, who no longer lives in California, have funneled millions of dollars into other groups hoping to topple the measure.
A spokesperson for Building a Better California did not return a request for comment, but Brin told The New York Times: "I fled socialism with my family in 1979 and know the devastating, oppressive society it created in the Soviet Union. I don't want California to end up in the same place."
Brin recently moved to the Nevada side of Lake Tahoe. Critics of the tax say there will only be more billionaires leaving California if voters pass the measure.
Union leader Regan calls Brin's move political theater. He pointed out that the wealth tax applies to California residents who lived in the state in January of this year, so moving out of state would not allow anyone to dodge the tax, nor would relocating after November, if the ballot measure prevails. Bloomberg estimated the tax could personally cost Brin around $13 billion.
Regan said Brin owes his success in part to government-backed research that helped create Google and insisted that a one-time 5% tax would not be overly burdensome for the tech mogul.
"You are now one of the five wealthiest people in the world in the state that made you rich, enormously rich," said Regan as if speaking directly to Brin, noting that California "needs to stabilize its healthcare system."
Some polls show that Californians are nearly evenly split on the tax.
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