California's controversial billionaire's tax advances

California Department of Finance

California's controversial billionaire's tax is advancing toward November's ballot, although the state's Secretary of State has not yet qualified it.

Supporters, led by healthcare workers, confirmed Monday that county election officials have verified they gathered enough signatures for it to be placed on the ballot.

"Now that California's historic Billionaire Tax has surpassed the state's signature requirement, we're one step closer to saving the hospitals and emergency rooms that we all rely on," Debru Carthan, a spokeswoman for the Billionaire Tax Now Coalition, said in a statement.

The issue has divided the state, with some billionaires threatening to leave.

It's also faced opposition from some leading Democrats, including Gov. Gavin Newsom.

Keely Martin Bosler, former head of California's Department of Finance, now a Democratic consultant to the state's labor unions, including the Service Employees International Union of California, the parent union of SEIU-UHW, and Lenny Mendonca, chief economic and business advisor to Newsom and chair of the California High Speed Rail Authority, co-wrote an op-ed in April opposing the measure.

The pair wrote that it's not necessarily taxing billionaires that is wrong, it's how the tax is constructed they take issue with.

"The state taxes capital gains as ordinary income. That means when a billionaire sells her stock, the gain gets taxed at the same rate as a paycheck," they wrote. "It is straightforward, it is constitutional, and it works. The federal government should do the same thing."

But that is not what the California Billionaire Tax Act proposes, they contend.

The initiative, backed by SEIU-UHW, would impose a one-time 5% tax on the net worth of anyone with more than $1 billion as of January 1, 2026. "It taxes wealth that has not been sold, income that has not been received, and gains that may not even hold their value by the time the bill comes due," they wrote.

Supporters see it as a way to close the funding hole created for states by passage of the One Big Beautiful Bill Act. Healthcare workers claim the cuts to Medicaid will result in massive job losses in their industry. Their hope is the billionaire's tax will fill the gap.

"With today's news, David won the second round against Goliath, but healthcare workers and our allies won't quit until we protect patients from the looming California healthcare collapse manufactured by Trump and Congress," Carthan said.

Carthan is referring to the $100 billion OBBBA cut from California's healthcare system to pay for massive tax breaks. Soon, local hospitals, emergency rooms, and clinics could be forced to shut their doors forever because billionaires insist on paying lower tax rates than hardworking families, according to the act's supporters.

The one-time tax will generate billions in critical funding to offset devastating cuts that have already begun impacting hospitals, emergency rooms, and clinics across the state, supporters said.

California's more than 400 hospitals statewide have already laid off more than 3,400 healthcare workers as of mid-March, with a second wave of layoffs expected as funding cuts tied to recent federal policy changes are phased in over the next several years, according to supporters. Statewide, projections show the cuts could result in the loss of up to 145,000 health care jobs, impacting hospitals, clinics, and home care providers, supporters said.

Without revenue from the California Billionaire Tax, federal healthcare cuts are expected to put an estimated 83 California hospitals and clinics at risk of closure, supporters said.

Supporters argue the benefit of the Act being retroactive is that billionaires can't avoid the tax by relocating. If the measure passes, 90% of the money collected will go to offset Medi-Cal cuts in order to prevent emergency room closures and other service cuts, and 10% will go toward funding food assistance and public education.