California billionaire tax qualifies for ballot as Newsom rejects compromise offer
California’s proposed billionaire tax is headed toward the November ballot, but supporters and opponents have just days to decide whether a compromise can keep the measure from going before voters.
The initiative, backed by Service Employees International Union-United Healthcare Workers West (SEIU-UHW), would impose a one-time 5% tax on California residents with net assets exceeding $1 billion. After qualifying for the ballot, supporters offered to reduce the tax rate to 2% if Gov. Gavin Newsom agrees to sign legislation creating a revised version of the tax. Newsom, however, has rejected the proposal and says he will not support any wealth tax.
The standoff has intensified an already contentious debate that pits progressive advocates seeking new funding for healthcare and social services against business leaders and moderate Democrats who warn the tax could harm California’s economy and long-term revenue base.
Billionaire Tax or Everyone Tax?
Proponents say the initiative would levy a one-time 5% tax on individuals whose net worth exceeds $1 billion. Supporters say the measure could raise tens of billions of dollars that would be directed primarily toward healthcare services, while also supporting education and food assistance programs.
If approved by voters, backers of the tax say it would apply to a relatively small number of ultrawealthy Californians.
Opponents disagree and point the tax language permits it to be applied to everyone.
Venture capitalist Chamath Palihapitiya points to “shifty language describing how the government plans to take your assets.”
In a post on X, Chamath wrote, “On page twenty-six of “The Billionaire Tax” proposal in California, it explains how the state legislature can convert from a Billionaire Tax to an Everyone Tax without voter approval. They can also adjust the tax to be a yearly tax, not just one time…again, without your approval.
Intelligence test for you: if this was meant to just target Billionaires, why did they write this in?”
Chamath further elaborated on the details tucked into the tax proposal. He wrote on X, “The Billionaire Tax is actually an Everyone Tax.
The Billionaire Tax is a new tax proposal written by four professors who don’t believe in the American dream. Some of them aren’t even American…go figure.
Despite its name, it applies to every California resident who currently has assets or ever will. The creators named it the Billionaire Tax so you would get into a froth and wouldn’t look closely at what it actually does to you.
On page twenty-six, it explains how the government can convert to an Everyone Tax without voter approval. They can also adjust the tax to be a yearly tax, not just one time…again, without your approval.
Here’s how the tax would work: As a voter, you’re being asked to approve a tax that would require you to:
1. list all your assets and the value of each, then submit them to the California Franchise Tax Board.
2. authorize the tax board to appraise your assets and confirm the value of each.
3. pay a penalty of up to forty percent of your tax bill if the board determines your reported value was too low in their opinion.
4. allow the tax board to subpoena your financial records from every one of your financial institutions for auditing.
This Everyone Tax runs 34 pages of shifty language describing how the government plans to take your assets.
Read the fine print and decide for yourself. If this were truly a billionaire tax, it would be 3 pages. It’s 34 pages so that it can create the mechanisms to steal from all of you.”
How the measure reached the ballot stage
The initiative was proposed by Service Employees International Union-United Healthcare Workers West (SEIU-UHW), a healthcare workers union representing more than 100,000 workers.
The union announced in April that it had submitted more than 1.5 million signatures to qualify the measure, nearly double the roughly 875,000 signatures required. California’s secretary of state later confirmed that enough valid signatures had been collected, allowing the proposal to advance toward the November ballot.
The qualification marks a significant victory for supporters, particularly because some opponents had hoped the initiative would fail to gather sufficient verified signatures.
Newsom leads opposition campaign as a moderate
Gov. Gavin Newsom has emerged as one of the proposal’s most prominent opponents and has vowed to stop the measure from becoming law.
Earlier this year, Newsom told The New York Times that he believed the tax could hinder innovation and economic growth in California. “I’ll do what I have to do to protect the state,” he said.
Newsom’s office has emphasized that the governor supports California’s progressive income tax system but opposes a separate wealth tax. According to his office, California’s current system places a larger burden on higher earners while avoiding taxes that disproportionately affect lower-income residents.
As the June deadline approaches, several organizations that typically align with Democratic causes have publicly opposed the initiative.
The California Teachers Association voted against the proposal, arguing that it would not provide sustainable long-term funding for schools and communities. Planned Parenthood Affiliates of California and several labor organizations have also joined the opposition.
The emergence of resistance from groups traditionally aligned with organized labor has increased pressure on supporters and highlighted growing concerns about the measure’s economic implications.
Supporters offer compromise as deadline nears
With the June 25 deadline to remove qualified initiatives from the ballot approaching, supporters have signaled a willingness to negotiate.
Organizers sent a letter to Newsom offering to withdraw the ballot measure if the governor agrees to sign legislation imposing a one-time 2% tax on billionaires instead of the proposed 5% levy. The offer marked a notable shift from earlier statements in which supporters insisted they were determined to take the proposal directly to voters.
Supporters say California needs additional revenue to offset healthcare funding reductions and protect hospitals, clinics and patient services across the state.
“To avoid healthcare cuts that will hurt millions, we are demanding that billionaires pay their fair share so our hospitals, clinics and hospitals can stay open,” ultrasound tech Mayra Castañeda, a member of SEIU-UHW, said of the plan.
Despite the proposal, Newsom’s office has indicated the governor will not support a wealth tax at any rate, leaving little time for the two sides to reach an agreement before the June 25 deadline.
The governor has also warned that the proposal could make California less competitive and eventually reduce state revenues if wealthy residents choose to relocate.
Newsom’s opposition appears firm despite the union’s compromise proposal. Responding to the offer to reduce the tax rate from 5% to 2%, a spokesperson for the governor told Inside California Politics that “changing the tax rate doesn’t change this measure’s fundamental flaws that harm working Californians.”
Supporters say healthcare funding is at stake
Backers of the initiative argue that California needs new revenue sources to protect healthcare services and social programs from federal funding reductions.
Supporters have framed the proposal as a response to concerns about cuts that could affect hospitals, healthcare workers and vulnerable populations across the state.
Progressive leaders including Sen. Bernie Sanders and Rep. Ro Khanna have voiced support for the measure, arguing that California’s wealthiest residents should contribute more to fund essential public services.
SEIU-UHW chief of staff Suzanne Jimenez defended the proposal amid mounting criticism.
“The number of people who have privately resisted pressure to oppose the billionaire tax is far greater than the small number who have opposed it.”
She added: “There is a big gap right now between the position some organizational leaders are taking versus the needs of their constituents, but that will not stop health care workers from achieving solutions that fight back against the Trump cuts to patient care in California.”
Silicon Valley billionaires enter the battle
The measure has also drawn fierce opposition from some of California’s wealthiest residents and technology leaders.
Google co-founder Sergey Brin has been among the high-profile critics warning that the tax could damage California’s competitiveness. Other prominent billionaires have contributed financially to campaigns opposing the initiative or supporting rival tax measures.
According to reports, PayPal and Palantir co-founder Peter Thiel donated $3 million to the California Business Roundtable, while former Google CEO Eric Schmidt contributed $1 million to the organization.
The involvement of major technology executives has transformed the debate into a broader battle over California’s economic model and future growth prospects.
Concerns about billionaire migration
One of the central arguments against the proposal is the possibility that wealthy residents could leave California if the tax is enacted.
Critics point to recent relocations by high-profile business leaders, including Google co-founder Larry Page, as evidence that affluent individuals can move their residences and investments elsewhere.
Opponents argue that because California relies heavily on income tax revenue from high earners, losing even a small number of wealthy residents could ultimately reduce state revenues rather than increase them.
Not every billionaire opposes the measure, however. Nvidia CEO Jensen Huang has publicly stated that he is “perfectly fine” with the proposed tax.
Early polling suggests voter support
Public opinion surveys conducted earlier this year suggested that the idea initially resonated with many voters.
A poll found that approximately half of registered voters supported a one-time wealth tax, while fewer than one-third opposed it.
The findings indicated that voters were receptive to arguments about taxing extreme wealth, particularly amid broader concerns about economic inequality and public funding needs.
Despite favorable early polling, recent developments suggest supporters may face a more difficult path than initially expected.
San Francisco voters recently rejected a separate tax targeting high-income earners, leading some political observers to question whether broader support for wealth-related taxes may be weakening.
Opponents hope that concerns about economic competitiveness, business investment and taxpayer migration will gain traction as voters learn more about the proposal.
Newsom’s standing ahead of a potential 2028 campaign
Although the measure has qualified for the ballot, supporters still have the option of withdrawing it before the June 25 deadline.
That possibility has fueled last-minute negotiations, but Newsom’s rejection of the proposed 2% compromise tax suggests a deal remains unlikely.
If no agreement is reached, California voters will decide in November whether to impose the one-time tax on the state’s wealthiest residents. Because it is a ballot initiative, Newsom would not have the authority to veto it if voters approve the measure.
The battle over the billionaire tax has become more than a debate about state revenues. It has also evolved into a test of the competing forces within California’s Democratic coalition.
Newsom has found himself aligned with business leaders, healthcare organizations and labor groups concerned about the state’s economic competitiveness, even as progressive activists and some unions push for a more aggressive approach to taxing wealth.
For a governor widely viewed as a potential contender in the 2028 presidential race, the outcome could influence how national Democrats view his economic agenda. Successfully defeating the measure could strengthen his standing among moderates and business-friendly Democrats, while supporters argue the proposal reflects growing voter demand for policies aimed at addressing wealth inequality.
Whether voters embrace the proposal or reject it, the outcome is likely to influence similar efforts across the country and further define California’s role at the center of America’s economic and political debates.
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John Dealbreuin came from a third world country to the US with only $1,000 not knowing anyone; guided by an immigrant dream. In 12 years, he achieved his retirement number.
He started Financial Freedom Countdown to help everyone think differently about their financial challenges and live their best lives. John resides in the San Francisco Bay Area enjoying nature trails and weight training.
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