California’s proposed billionaire tax: what you need to know | California

California’s proposed billionaire tax will officially be put to voters in November. After receiving more than twice the required signatures to qualify, the secretary of state approved the ballot measure late Thursday.

The approval came after a secret deal between California governor Gavin Newsom, who opposed the proposal, and the labor union that supported it failed to yield results.

Although the wealth tax only applies to individual billionaires living in California, the idea of ​​passing the tax on the ultra-rich has become a national issue. Prominent political figures on the left, such as Vermont senator Bernie Sanders, supported the state measure, saying it could pave the way for a similar tax at the federal level.

“Never before have so few people had so much wealth and so much power,” Sanders said in a February speech supporting the initiative in Los Angeles. “These billionaires will learn that we still live in a democratic society where the people have some power.”

But supporters of the measure will have to contend with powerful opponents of the initiative, including Newsom and Silicon Valley billionaires. The tech and crypto industry is pouring tens of millions of dollars into opposing the initiative, which is expected to amount to unprecedented campaign spending.

This means a messy fight is about to get a lot more complicated.

What will the billionaire tax do?

The California Billionaire Tax Act would impose a one-time 5% tax on any California resident worth more than $1 billion. The proposal is supported by the Service Employees International Union-United Healthcare Workers West (SEIU-UHW) as a means to fund California’s struggling healthcare workers. Food aid, education, and health programs, including maintaining low-cost health insurance and preventing widespread hospital and emergency room closures.

“People who work regularly pay higher tax rates than the wealthiest Americans,” SEIU-UHW chief of staff Suzanne Jimenez previously told the Guardian in an email. “It is a reasonable step to ask those who benefit most from the economy to contribute more to stabilizing health systems, especially those that are directly threatened.”

Jimenez said the initiative is a direct response to federal health care cuts under Donald Trump’s One Big Good Bill Act.

The tax will be retroactive to all billionaires residing in California as of January 1, 2026. The state is home to more billionaires (about 200) than any other state, many of whom increased their wealth during the recent AI boom.

Who opposes the billionaire tax and why?

While several local unions and lawmakers, including California congressman Ro Khanna, have joined the coalition to support the billionaire tax, powerful organizations in the state have also stepped in to oppose it. These include other labor unions such as the California Teachers Association and the California State Building and Construction Trades Council, as well as health groups including the California Medical Association and Planned Parenthood Affiliates of California.

These groups say the ballot measure has no long-term funding path and no guarantee that the one-time lump sum will go to those most in need. A spokesperson for Planned Parenthood Affiliates of California told the Guardian that the group “agrees that the rich should pay their fair share” but that the measure is “short-sighted” and “does not offer a sustainable solution to funding cuts.”

Newsom has been one of the most vocal opponents, vowing to stop the initiative from the beginning. He said such wealth taxes at the state level would “push the race to the bottom” and that the measure would drive billionaires out of California and eliminate income status.

Last week, Newsom reportedly formed a coalition to help negotiate a deal with the union to withdraw the measure before Thursday’s approval deadline. Although SEIU-UHW offered the one-time concession to reduce the tax from 5% to 2%, the governor did not accept the watered-down offer.

What about tech billionaires?

No industry has fought harder to combat the billionaire tax than the tech industry. Since the early days of gathering signatures for the ballot measure late last year, Silicon Valley billionaires have been pouring massive amounts of money into super political action committees (Super Pacs) to fight the initiative.

The biggest spenders are Google co-founder Sergey Brin, who is worth about $260 billion and has spent at least $82 million so far to oppose the tax, and crypto billionaire Chris Larsen, who is worth more than $11 billion and has contributed at least $13.2 million opposing the measure, according to campaign finance filings.

Dozens of Silicon Valley luminaries have also donated millions, including Palantir co-founder Peter Thiel, former Google CEO Eric Schmidt, DoorDash CEO Tony Xu, Stripe CEO Patrick Collison and several prominent venture capitalists.

This expenditure paid off. Over the past few days, tech billionaires have managed to push two of their own initiatives designed to oppose a wealth tax on the November ballot. One measurement It would ban new taxes on individually owned assets and savings and prohibit California from imposing the tax retroactively. other measure It would require an audit of all state programs that receive funding from the voter initiative and prohibit any new state taxes that take effect after Jan. 1, 2026.

This means three taxation measures will appear on California’s November ballot, likely causing voter confusion. Election watchers predict that Silicon Valley will increase its spending and that the next few months will see a flurry of activity in which state residents will be bombarded with mailers, robocalls and ad campaigns about the billionaire tax.

“What you’re seeing now … was just a trickle of what was to come,” said Francesco Trebbi, a professor of public policy at the University of California, Berkeley. “It will be exponential.”