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Understanding the proponents\u2019 reasoning of California\u2019s November \u2018billionaire tax measure\u2019\u00a0<\/p>\n
When Rep. Alexandria Ocasio-Cortez (AOC) wore her infamous \u201cTax the Rich\u201d dress<\/a> at the Met Gala in 2021, the dress and its message drew widespread attention and criticism. California has now taken actionable steps toward taxing the ultra-wealthy by proposing a one-time 5% tax on California residents with a net worth exceeding $1 billion. Like AOC\u2019s dress, this remains a controversial measure that has qualified for the November ballot: it has faced competing ballot initiatives and opposition from leading Democrats \u2014 namely, Gov. Gavin Newsom.<\/p>\n In a December 2025 report<\/a> published by the University of Missouri School of Law Legal Studies, researchers and co-authors of this ballot measure proposed it in response to the Trump administration\u2019s \u201cOne Big Beautiful Bill Act\u201d (OBBBA)<\/a>, which passed in July 2025. Under this measure, 200 of California\u2019s billionaires would be taxed 5% over five years, resulting in an expected $100 billion. These scholars argue that the OBBBA has essentially caused an emergency funding shortfall for certain state healthcare programs that support many Californians.\u00a0<\/p>\n \u201c[OBBBA] will likely create a $19 billion per year budget hole for California health spending,\u201d the report reads. \u201cIf the state cannot find the revenue to fill that hole, as many as 1.6 million Californians could lose their Medi-Cal health insurance coverage.\u201d\u00a0<\/p>\n In addition to funding health care programs, their research shows that the billionaire tax revenue would help finance other essential programs in education and food support, such as the Supplemental Nutrition Assistance Program (SNAP)<\/a>, which has provided meals for many families. The predominant critiques from these researchers, as well as other scholars who support this measure, argue that the OBBBA radically reduced necessary programs for everyday Americans while \u201cincentivizing\u201d the wealthiest among us.\u00a0<\/p>\n The report also notes that California remains uniquely positioned to adopt this measure because the state is home to many billionaires.\u00a0<\/p>\n \u201cCalifornia today has 12% of the US population but 27% of all US billionaire wealth,\u201d the report reads.\u00a0<\/p>\n However, the existing bounty of billionaires in California is cited by opponents of this measure as a concern. Their main worry is rooted in the assumption that these billionaires will leave the state, ultimately leaving the economy in disarray. Newsom, among other opponents such as Democratic Rep. Zoe Lofgren, echoes a similar sentiment.\u00a0<\/p>\n \u201cEverybody should be paying their fair share, but if people can up and flee, I\u2019d rather see something done at the national level,\u201d Lofgren<\/a> said.\u00a0<\/p>\n The report refutes this claim. As of Jan. 1, 2026, billionaires would be required by law to pay the one-time tax in full, and leaving will not exempt them from paying. The research also clarifies that, unlike other unsuccessful wealth taxes, this measure differs in that it does not \u201cexempt private businesses [or] trust-held wealth\u201d but instead taxes billionaires to pay their \u201cfull net-worth without loopholes.\u201d<\/p>\n One of the measure\u2019s proponents, Robert Reich, a UC Berkeley professor and former United States Secretary of Labor under the Clinton administration, adds to the claims that the wealthy won\u2019t flee.\u00a0<\/p>\n \u201cMassachusetts increased taxes on millionaires and billionaires in 2023,\u201d Reich<\/a> said. \u201cWhat happened? The rich didn\u2019t move, and the state generated billions in revenue that\u2019s now going to public education and transportation.\u201d\u00a0<\/p>\n Darien Shanske, a co-author of the report and of the 2026 tax measure, notes that, despite Newsom\u2019s concerns about the specific details of this measure, they can agree on the \u201cfractured\u201d nature of California\u2019s tax system.\u00a0<\/p>\n \u201c[Newsom] has conceded the severity of the [federal] cuts,\u201d Shanske said. \u201cHe concedes that our current tax system is broken as to the super wealthy and that a small wealth tax is a fair and efficient solution.\u201d\u00a0<\/p>\n Under the current tax system, some of the wealthiest Californians, such as Mark Zuckerberg, Sergey Brin, and Larry Page, can avoid paying income tax if they don\u2019t sell their stocks, according to the report.\u00a0<\/p>\n Despite their agreement on the state of California\u2019s economy, Shanske takes issue with the way many Democrats, especially Newsom, have ardently opposed the measure without offering a comparable alternative.\u00a0<\/p>\n \u201cI respect the Governor, but his approach here \u2014 to my mind \u2014 is inexplicable,\u201d Shanske said. \u201cHe has had years to come up with his own plan and months to negotiate some related approach he likes more with the union. He has not.\u201d<\/p>\n Instead, Newsom has been pushing for a federal billionaire tax. While Shanske doesn\u2019t oppose holding billionaires accountable at a national scale, he acknowledges that this process will demand a more concerted effort \u2014 requiring approval from Congress, the president, and the federal Supreme Court. Therefore, he feels that the California billionaire tax measure would provide more immediate essential funds needed after major slashes to federal and state programs have taken effect.<\/p>\n \u201cThis Congress and president are not unlikely to relent and so we need a solution,\u201d Shanske said. \u201cIndeed, a one-time 5-year solution to \u2014 hopefully \u2014 a one-time crisis is wholly appropriate. [\u2026] I still hope [Newsom] will reconsider.\u201d\u00a0<\/p>\n With the 2026 billionaire tax measure set to appear on the ballot in November, the decision ultimately rests with California voters.<\/p>\n Follow the Vanguard on Social Media \u2013 X<\/a>, Instagram <\/a>and Facebook<\/a>.\u00a0 Subscribe <\/a>the Vanguard News letters.\u00a0 To make a tax-deductible donation, please visit davisvanguard.org\/donate<\/a> or give directly through ActBlue<\/a>.\u00a0 Your support will ensure that the vital work of the Vanguard continues.<\/p>\n Categories: Breaking News<\/a> Elections<\/a> State of California<\/a> Tags: billionaire tax<\/a> California ballot measure<\/a> Gavin Newsom<\/a> health care funding<\/a> One Big Beautiful Bill Act<\/a> State Budget<\/a> tax policy<\/a> wealth tax<\/a>