California's Proposed One-Time 5% Billionaire Tax Aims to Raise $100 Billion for State Budget

California is currently considering a significant fiscal measure, the "2026 Billionaire Tax Act" (Initiative 25-0024), which proposes a one-time 5% excise tax on the net worth of its wealthiest residents. This initiative, filed by the Service Employees International Union (SEIU), seeks to address a projected $30 billion state budget shortfall and bolster funding for healthcare and education. If it qualifies, voters could decide on the measure during the November 2026 ballot.

The proposed tax would apply to California residents and trusts with a net worth exceeding $1 billion, impacting an estimated 200 billionaires in the state. The levy would be based on wealth as of December 31, 2026, with payments due by April 15, 2027, and includes provisions for retroactive application to residents as of January 1, 2026. As reported by FORTUNE, "California is considering a one-time 5% wealth tax on billionaires."

Proponents, including SEIU-UHW and a coalition of healthcare workers and economists, argue the tax could generate an estimated $100 billion. They contend it is a "fair" solution to financial crises, particularly federal funding cuts to California's Medicaid program, asserting that billionaires have benefited significantly from state resources. Research cited by supporters suggests that high earners do not leave the state at rates that would negate the tax's benefits.

However, the proposal faces considerable opposition and potential legal challenges. Critics, such as the Howard Jarvis Taxpayers Association and the "Stop the Squeeze" committee, raise concerns about its constitutionality, citing potential violations of due process and the retroactive nature of the tax. Governor Gavin Newsom has also expressed opposition to wealth taxes, and opponents warn of significant capital flight and administrative complexities, noting that previous wealth tax proposals in California have failed.

The initiative is currently undergoing a 30-day public review period, after which proponents must gather approximately 875,000 voter signatures to qualify for the 2026 ballot. This proposal reignites a long-standing debate in California regarding wealth taxation, its economic impact, and the state's competitiveness. The outcome will significantly influence future fiscal policy and the state's approach to addressing budget deficits.