California’s Proposed 5% Wealth Tax on Billionaires

California has proposed a one-time 5% wealth tax on billionaires, aiming to raise approximately $100 billion from over 200 billionaires in the state. The tax, which targets assets including non-publicly traded equity and personal assets over $5 million, is designed to fill funding gaps in the federal Medicaid program. Critics argue the tax could drive tech entrepreneurs out of California, impacting the state’s economy.

The proposal, backed by the Service Employees International Union, faces significant opposition from the business community and California Governor Gavin Newsom. It must collect 875,000 valid voter signatures by June to be put to a vote in November. If passed, the tax would apply retroactively to residents as of January 1, 2026, potentially leading to legal challenges. Some billionaires, like Google co-founder Larry Page, have already begun relocating to avoid the tax.