California proposal would levy one-time 5% tax on billionaires' wealth

A proposed California ballot initiative backed by a health care worker union would impose a one-time 5 percent tax on any resident worth more than $1 billion, participants in a New York Times Opinion roundtable said. The measure has split Democrats: Gov. Gavin Newsom opposes it, while Representative Ro Khanna supports it, the discussion noted.

Emmanuel Saez, who helped design the proposal, argued the tax is aimed at raising revenue to offset federal defunding and said it would be assessed on residence as of Jan. 1, 2026 to limit avoidance; he estimated California billionaires hold roughly $2 trillion in wealth and that a 5 percent levy could raise about $100 billion.

Catherine Rampell and Steven Rattner questioned the plan’s administrability and warned of capital flight and valuation difficulties, while proposing alternatives such as higher capital gains taxes, changes to inheritance rules, taxing borrowing against assets and closing loopholes like step-up in basis.

The roundtable also noted that some wealthy individuals and founders have already moved assets or residence out of California. The initiative, which the union seeks to place on the November ballot, would be a one-time measure designed to raise revenue for five years, Saez said; opponents warned it could either fail at the polls, be struck down in court, or prompt pre-emptive departures that would reduce income tax revenue.

Key Topics

Politics, California Ballot Initiative, California, Wealth Tax, Gavin Newsom, Ro Khanna