In one of the most talked-about ballot measures this election, California labor unions are asking voters to approve a one-time, 5% tax on individuals and trusts with a net worth exceeding $1 billion.
Proposition 40, the first-of-its-kind, would be levied on people and trusts with more than $1 billion in “covered assets,” including businesses, securities, art, collectibles and intellectual property. However, it excludes real property assets, such as land and real estate owned directly by an individual, as well as some pensions and retirement accounts.
If approved by voters, 90% of the revenues generated by what’s been dubbed the billionaire tax would go toward healthcare-related programs, primarily to fund Medi-Cal, the state’s Medicaid system. The remainder would be allocated to food assistance and education-related programs.
This measure — excpet this to be an expensive one this year — is backed by the Save California Health Care and Public Education PAC, sponsored by Service Employees International Union Healthcare Workers West. The group said cuts to federal funding will cost California’s healthcare programs $100 billion over the next five years. The tax, they said, is a way for the state’s billionaires to “step up” and prevent a collapse of the state’s healthcare system.
The Legislative Analyst’s Office said the state would probably collect tens of billions of dollars through the tax, temporarily increasing state tax collections “spread across several years beginning in 2027.”
However, the office said, there’s a good chance income tax revenues collected would decrease more per year as “it is likely that some billionaires decide to leave California” along with the income taxes they currently pay — a fear among opponents of Proposition 40.
One of those opponents is Gov. Gavin Newsom, who has argued the extra tax is only a temporary fix for an ongoing problem and could force an exodus of the state’s ultrawealthy.
At the same time, Newsom called for a nationwide billionaire tax.
Other ballot measures this year, Proposition 41 and Proposition 42, compete with this one, applying revenue from special taxes to the state’s spending cap and enacting retroactive bans on taxes, respectively.
If voters approve the billionaire tax and the ballot measures meant to cancel it out, the one with the most votes overall would win out.