California’s Billionaire Tax is a Policy Disaster 

California’s proposed billionaire tax reads more like a piece of fiction than a real policy proposal. Unfortunately, it is much more real than the $10 billion high-speed rail.

In December 2025, the healthcare workers union SEIU-UHW filed a ballot initiative in California proposing a 5% tax on all California residents with a net worth valued at $1 billion and over. The tax is retroactive and would apply to all eligible residents beginning January 1^st, 2026. However, the earliest this tax could go into effect would be November 2026. This means California could end up losing tax revenue even if the ballot initiative doesn’t pass, as it incentivizes wealthy residents to escape before the tax passes. People and wealth have already been fleeing the state in massive numbers, and that trend will only continue. (See ATR’s article on this here.) 

There is a good reason why Google co-founder Sergey Brin and Larry Page are taking no chances and have already decided to leave California late last year. Because of their leadership positions, their “preferred voting” shares are valued at ten times what a typical “Class A”, publicly tradeable share would be. So, instead of a simple 5% tax, the proposed tax would take nearly 50% of their Alphabet shares, an estimated $60 billion. For a more thorough explanation of how poorly designed this billionaire tax is, see the Tax Foundation’s analysis here.

The left’s tried and trusted argument that they are simply making the rich pay their “fair share” is a fallacy. The top 1% in America already account for 37% of the revenue from income taxes. And in California, the top 1% of earners account for 40% of the state’s revenue from income tax, an estimated $122 billion. With the goal of raising money, California’s billionaire tax will push out the state’s top source of income. Structuring tax policy around the rich this way brings instability to budgets and revenue flows.

Beyond the way this tax is designed, California voters should also question why SEIU-UHW initiated this ballot in the first place. The main objective of this tax is to prop up California’s healthcare system, Med-Cal. California’s own State Auditor classified Med-Cal as ‘high risk’, as it does not do a sufficient job in checking the eligibility of its recipients. This has led to a massive uptick in spending on undocumented immigrants, resulting in a ballooning budget, already set at $202.7 billion for 2025-2026. A report from California’s very own Department of Health Care Access and Information explained how the state could “save between $58 and $73 billion per year by eliminating waste and improving efficiency”. Throwing more money into this program will not solve its obvious fundamental issues.

The billionaire tax ballot initiative has caused internal divisions within California’s Democrat establishment. Some, like Silicon Valley’s Representative Rho Khanna (CA-17), have claimed that the rich need to pay their fair share, and that the tax will share prosperity. And others, notably far left Governor Gavin Newsom have come out against the initiative, calling it ‘bad policy’. 

Any attempts by Newsom or other California Democrats to distance themselves from this ballot initiative is merely theatrical. California has already been broken by their policies. The state is experiencing a mass exodus of billionaires, industry, and people due to its high taxes and heavy regulatory environment.

Newsom claimed in his final ‘state of the state’ address that California provided a “blueprint for other [states] to follow”. In reality, this ballot initiative shows California continues to serve as a warning of what is to come if other states continue down its path: High taxes, skyrocketing cost of living, wasteful spending, and a business exodus.