California's wealthiest residents could soon face a new kind of tax bill — one that targets their net worth rather than their income. A proposed ballot measure known as the 2026 Billionaire Tax Act would impose a one-time 5% levy on the fortunes of roughly 200 billionaires living in the state. Supporters say the measure could raise about $100 billion to help fill funding gaps in health care and education.
The Reason Behind The Tax
The effort is led by the Service Employees International Union, which represents 2 million workers in over 100 occupations across the U.S., Canada, and Puerto Rico. The union says the tax is needed to offset massive cuts in federal spending on Medicaid and food aid recently signed into law by President Donald Trump. Those cuts are expected to reduce California's Medicaid funding by $30 billion annually and could cause millions of residents to lose health coverage, according to the California Budget & Policy Center.
Don't Miss:
- Missed Nvidia and Tesla? RAD Intel Could Be the Next AI Powerhouse — Just $0.81 a Share
- Buffett's Secret to Wealth? Private Real Estate—Get Institutional Access Yourself
"If we do not do this, millions of people are going to lose health care, an untold number of people will go without treatment and there will be tragedy after tragedy," SEIU President Dave Regan said in a statement, according to media reports.
Under the proposal, the tax would apply to the net worth of California billionaires in the 2026 tax year. The funds would go primarily toward maintaining Medi-Cal coverage for low-income residents and supporting public schools affected by federal grant reductions.
A Big Target: California's Billionaires
California is home to some of the richest people in the world. Four of the top 10 billionaires — including Meta's Mark Zuckerberg, Nvidia's Jensen Huang, and Google co-founders Larry Page and Sergey Brin — together hold more than $840 billion in wealth. If the measure passed, those four alone could owe around $40 billion collectively, according to Bloomberg.
"The tax is small relative to the massive gains billionaires have made yet large enough to preserve programs that are crucial for California's economy and its continued success," economist Emmanuel Saez of the University of California, Berkeley, told Bloomberg.
Trending: Wall Street's $12B Real Estate Manager Is Opening Its Doors to Individual Investors — Without the Crowdfunding Middlemen
While real estate holdings would be exempt, most other assets — from private company shares to investment portfolios — would be covered. Proponents say the tax would be payable over five years and closely audited to prevent evasion.
Critics Warn of an Exodus
Not everyone is on board. Economists and business leaders have cautioned that even a one-time wealth tax could push more of California's richest residents to relocate.
Enrico Moretti, an economics professor at the University of California, Berkeley, called the proposal "misguided," saying it could discourage investment and future business development in the state. "Even if it's a one-time tax, it would increase the chances of these people to relocate," he told Bloomberg.
See Also: Bill Gates Invests Billions in Green Tech — This Tree-Free Material Could Be the Next Big Breakthrough
That concern isn't theoretical. Elon Musk, the world's richest person, moved from California to Texas in 2020, citing the state's high taxes and regulations. And last year, he moved SpaceX's headquarters to Texas, after posting on X that a new California law was "the final straw."
Some lawmakers fear others could follow suit if the measure passes.
What Happens Next
Before Californians can vote on the measure, backers must collect more than 870,000 signatures to qualify it for the November 2026 ballot. Gov. Gavin Newsom, who has previously opposed wealth-based tax hikes, has not yet taken a public position on this initiative.
If approved by voters, the tax could begin generating funds in 2027. Whether it keeps billionaires in California—or sends more of them packing—remains to be seen.
Read Next: 7 Million Gamers Already Trust Gameflip With Their Digital Assets — Now You Can Own a Stake in the Platform
Image: Imagn Images
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
