California’s Proposed “Billionaire Tax” makes ballot, but backers give Newsom an Ultimatum

California’s new billionaire tax fight is exposing how both parties let elites play by different rules while ordinary families scramble to afford health care and groceries.

Story Snapshot

A one-time 5% tax on about 200 California billionaires has qualified for the November ballot and could raise up to $100 billion for health care, schools, and food assistance.^[4]
Governor Gavin Newsom tried and failed to keep the measure off the ballot, warning it will drive the wealthy out of the state and destabilize funding for basic services.^[2]
Labor unions and health advocates are backing the tax as an “emergency” fix after federal cuts to Medicaid and other safety-net programs under President Trump.^[2]^[8]
Powerful donors, tech leaders, and major groups like teachers and Planned Parenthood oppose it, turning the fight into a test of whether voters or elites decide how the rich are taxed.^[6]^[8]

What the Billionaire Tax Would Do

The 2026 Billionaire Tax Act would place a one-time 5% tax on the total wealth of Californians worth more than $1 billion, hitting about 200 of the richest people in the state.^[4]^[12] Supporters say this “emergency tax” could bring in around $100 billion, mostly to protect health care programs after federal cuts and to support schools and food aid.^[2]^[8] The tax would be based on worldwide assets as of late 2026 and could be paid in installments over five years, but would still be a huge bill for each billionaire.^[14]

The measure has already cleared a major hurdle: it collected well over the roughly 900,000 signatures needed and was certified for the November ballot by state officials.^[4]^[12] Backers include the Service Employees International Union United Healthcare Workers, which represents about 120,000 health workers, along with other progressive groups that see this as a reset of the “social contract” in a state with extreme inequality.^[4]^[8] Early polling from a University of California Berkeley survey found about half of voters leaning yes, with strong support among many lower- and middle-income residents.^[12]

Why Newsom and Powerful Allies Want It Stopped

Governor Gavin Newsom has blasted the billionaire tax as a plan that “makes no sense,” arguing it would destabilize California’s already shaky tax base and push the wealthy to leave.^[1]^[2] He told The New York Times the proposal has “already negatively impacted the state” because some billionaires are moving and taking their tax payments with them, though no independent migration study has confirmed how many.^[2] Newsom warns that if rich residents flee, the state could lose money used to pay firefighters, teachers, and other basic services.^[2]

Newsom’s opposition is backed by a broad coalition of tech leaders, business groups, and major organizations not usually friendly to billionaires, such as teachers’ unions and Planned Parenthood.^[6]^[8] Many of these groups say they support higher taxes on the wealthy in general but argue a giant one-time hit is too risky. They prefer steadier, ongoing revenue streams instead of a single windfall they believe could blow a hole in the budget later.^[8] Critics also question the $100 billion figure, noting that nonpartisan state analysts only confirm “tens of billions” and warn of future losses if the rich move assets or themselves out of California.^[2]

Retroactive Tax and Fears About Elites Dodging the Rules

One of the most controversial parts of the measure is its retroactive rule: anyone who was a California resident on January 1, 2026 would owe the tax, even if they leave later.^[4]^[12]^[15] Legal experts say this could face court challenges under due process rules, because it taxes people based on past residency, but supporters argue the state already taxes residents on worldwide income and that similar rules have been upheld.^[4]^[15] The initiative would amend the state constitution to allow wealth taxes on many kinds of property and investments while excluding homes and most retirement savings, trying to aim only at extreme wealth.^[13]^[16]

For many regular voters, this fight taps into a simple frustration: elites seem to get special treatment while everyone else pays in full and on time. Critics warn that billionaires will hire top lawyers, move assets into trusts, or shift their official residence to other states to dodge the tax.^[14] Supporters counter that the measure’s detailed language about trusts and worldwide assets is meant to close loopholes and force billionaires who built fortunes in California to pay a fair share.^[14]^[16] The question for November is whether voters trust the system enough to believe those rules will stick when the very rich push back.

Deeper Split Inside the Democratic Party and What It Signals Nationally

This billionaire tax has opened a major split among Democrats in California and across the country, with unions and progressive leaders on one side and Newsom and many establishment figures on the other.^[3]^[8] Newsom is widely seen as a top prospect for the 2028 Democratic nomination, and his hard line against wealth taxes puts him at odds with the “tax the rich” wing that is gaining strength in other big cities.^[3] Some progressive commentators frame this as proof that even many Democrats side with deep-pocketed donors and Silicon Valley executives when real money is at stake.^[5]

The billionaire wealth tax proposal will appear before California voters in November, after failed efforts by Gov. Gavin Newsom and allies to persuade the union behind the tax to withdraw it.

More from me and @pkwsj: https://t.co/bqTQzK6wCN

— Laura J. Nelson (@laura_nelson) June 26, 2026

Nationally, this measure could become a test case for whether voters can use direct democracy to bypass a political class that often protects the very wealthy.^[8]^[19] If the tax passes and survives court challenges, it would be the first statewide wealth tax enacted through a ballot in the United States, breaking a long pattern of failed attempts.^[19] If it fails, many Americans on both the left and right may see it as one more sign that the system is rigged against ordinary people who are already dealing with rising health costs, high housing prices, and shrinking trust in government.