2026 Billionaire Tax Act

The 2026 Billionaire Tax Act is a proposed California ballot initiative that would impose a one-time 5% tax on the total net worth of California residents with wealth exceeding $1 billion.[1] Proponents of the bill claim that it will support public programs in the state, while critics warn that it will cause capital flight and fail to achieve revenue objectives.

Background

The Service Employees International Union–United Healthcare Workers West (SEIU-UHW) filed the initiative. It was drafted by Brian Galle of the University of California, Berkeley, David Gamage of the University of Missouri, and Darien Shanske of the University of California, Davis, citing research by Gabriel Zucman and Emmanuel Saez.[2] In December 2025, California Attorney General Rob Bonta issued the official title and summary.[3] Collected funds are intended for support of the state's healthcare system and food assistance.[4][5]

The California Legislative Analyst's Office estimated the tax would collect tens of billions of dollars beginning in 2027, but noted that some billionaires would likely leave the state, reducing ongoing income tax revenues.[1]

Analysis

The Tax Foundation argued that the effective tax rate could far exceed 5% for some taxpayers due to provisions related to dual-class share structures.[6]

Analysis by the Hoover Institution estimated that "permanent loss of income taxes from the departing residents indicates a high likelihood that net effect of the Billionaire Tax Act will be negative" by almost $25 billion.[7]

Kent Smetters, having analyzed European wealth taxes, noted in response to related inquiry by the Los Angeles Times that they are typically repealed because they "always raised quite a bit less revenue than what was initially projected."[8]

Attorneys consulted by CNBC commented that the proposal was likely to draw challenges on constitutional grounds, and that one of its provisions, to make the tax apply retroactively to January 1, 2026, may violate due process.[9] A private wealth lawyer told the LA Times that he expected the enforcement costs to be far greater than the proposal drafters anticipated.[8]

Reactions

California Governor Gavin Newsom stated that he opposed the proposal, warning that it could injure government finances and create a disadvantage of economic competitiveness compared to other states. Bernie Sanders advocated in support of the measure, citing "unprecedented and growing wealth and income inequality".[10] Ro Khanna and Tom Steyer also stated support of the measure.[11]

In December 2025, Google founders Larry Page and Sergey Brin terminated or moved out of California 60 limited liability companies that held their assets. Jensen Huang of Nvidia said that he planned to remain in California despite the tax.[12] Peter Theil noted in reaction to news of the proposal that he "established a significant presence in Miami over the last several years, maintaining a personal residence in the city since 2020."[9] Two political action committees, the California Business Roundtable and Stop the Squeeze, formed to combat the initiative.[5]

In February 2026, activists staged a pro-billionaire protest march in San Francisco.[13]

Polling in March 2026 indicated that half of registered voters supported the initiative.[14]

References

  1. ^ a b "New tax on the wealth of billionaires". California Legislative Analyst's Office. Retrieved February 26, 2026.
  2. ^ Dodge, Blake. "Meet the Architects of California's Billionaire Tax". Pirate Wires. Archived from the original on 2026-02-17. Retrieved 2026-03-11.
  3. ^ "California Billionaire Tax Act - SEIU UHW". SEIU UHW -. 2025-10-23. Retrieved 2026-03-11.
  4. ^ Barraza, Paris. "What is the California Billionaire Tax Act? Is it actually happening?". USA TODAY. Retrieved 2026-03-11.
  5. ^ a b "Billionaires vs. Unions: California's 2026 tax war is on". sfstandard.com. 2026-03-09. Retrieved 2026-03-11.
  6. ^ "California Wealth Tax: Details & Analysis of Proposed Billionaire Tax". Tax Foundation. January 14, 2026. Retrieved February 26, 2026.
  7. ^ "The Net Present Value of the Billionaire Tax Act: An Assessment of the Fiscal Effects of California's Proposed Wealth Tax". Hoover Institution. Retrieved 2026-03-11.
  8. ^ a b "Is California's proposed billionaire tax smart policy? History holds lessons". Los Angeles Times. 2026-01-26. Retrieved 2026-03-11.
  9. ^ a b Frank, Robert (2026-01-08). "California's controversial wealth tax proposal leaves billionaires with little way out". CNBC. Retrieved 2026-03-11.
  10. ^ Blood, -Michael R.; Blood, Associated Press Michael R.; Press, Associated (2026-02-18). "Sanders and Newsom clash over proposed tax on California's billionaires". PBS News. Retrieved 2026-03-11.
  11. ^ "Democratic fault lines emerge over California's billionaire tax proposal". NBC News. 2026-01-30. Retrieved 2026-03-11.
  12. ^ Mac, Ryan; Schleifer, Theodore; Knight, Heather (2026-01-09). "Google Guys Say Bye to California". New York Times. The Google founders' shrinking connections to California underscore the impact of a potential ballot measure that would affect the state's wealthiest residents. ... The ballot initiative, which was proposed by the Service Employees International Union-United Healthcare Workers West to offset federal budget cuts that will affect California's health care system, has elicited a broad spectrum of reactions.
  13. ^ Ropek, Lucas (February 8, 2026). "San Francisco's pro-billionaire march draws dozens". TechCrunch. Retrieved February 26, 2026.
  14. ^ Mancini, Ryan (2026-03-10). "Half in California would support one-time tax on ultrawealthy: Poll". The Hill. Retrieved 2026-03-10.
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