California, October 25, 2025
News Summary
California is considering the ‘2026 Billionaire Tax Act,’ a proposal for a one-time 5% tax on residents with net worth exceeding $1 billion. This initiative aims to address a $30 billion health care funding shortfall and would allocate 90% of the revenue to health care and 10% to K-12 education. For the proposal to qualify for the November 2026 ballot, it needs nearly 875,000 signatures. While supporters view it as a step toward fair wealth taxation, critics fear it may drive billionaires away and impact the state’s economy.
California is considering a new proposal that would impose a one-time, 5% tax on residents with a net worth exceeding $1 billion. The initiative, termed the “2026 Billionaire Tax Act,” has been submitted to the California Attorney General’s office. This proposed tax aims to address a significant $30 billion funding shortfall in the state’s health care sector, resulting from anticipated federal funding cuts.
If approved, the measure could be included on the November 2026 ballot, but it would need nearly 875,000 signatures to qualify. The proposal indicates that 90% of the revenue generated from the tax would be allocated to health care funding, while the remaining 10% would be directed toward K-12 public education. Additionally, the revenue would be capped at $25 billion per year and maintained in a designated “Billionaire Tax Reserve Account.”
The proposal highlights that the wealth of billionaires has “largely escaped fair taxation,” contributing to increasing economic inequality. All California residents affected by this tax would be required to declare their total net worth, which includes assets from private companies, real estate, and art. Payments for the tax could be made in full or spread over a period of five years, with a significant penalty for underreporting.
Currently, California is home to around 180 billionaires whose collective wealth is estimated at approximately $2 trillion. The bill was drafted with the involvement of economic professors from the University of California, Berkeley, and is supported by the Service Employees International Union. Proponents of the tax argue that it represents a fair approach to taxing substantial wealth, especially when contrasted with the higher taxes paid by non-billionaire Californians, who reportedly pay an average of 6% more of their economic income in taxes.
However, the proposal has faced criticism. Opponents express concerns that such a tax could incentivize billionaires to relocate to states with lower tax rates, which may reduce capital investment within California. They also warn that this tax could adversely affect the state’s entrepreneurial environment and overall economic landscape.
The initiative, if it secures requisite support and is passed, would mark a significant precedent as California would become the first U.S. state to implement a direct wealth tax targeting billionaires. The California Attorney General’s office is expected to deliver a formal title and summary of the initiative in the coming weeks.
Key Features of the 2026 Billionaire Tax Act
- Proposed Tax Rate: 5% one-time tax on net worth exceeding $1 billion
- Annual Health Care Funding Gap: Approximately $30 billion
- Revenue Allocation: 90% to health care, 10% to K-12 education
- Revenue Cap: $25 billion per year
- Estimated Billionaires in California: Approximately 180
- Total Wealth of Billionaires: Approximately $2 trillion
- Signature Requirement: Nearly 875,000 to qualify for the ballot
Frequently Asked Questions
What is the 2026 Billionaire Tax Act?
The 2026 Billionaire Tax Act proposes a one-time, 5% tax on California residents with a net worth exceeding $1 billion to address a $30 billion health care funding shortfall.
How would the tax revenue be allocated?
Ninety percent of the new tax revenue would be allocated to health care, while 10% would be directed to K-12 public education.
How many signatures are required for the initiative to qualify?
The initiative requires nearly 875,000 signatures to qualify for the ballot.
What concerns do opponents of the tax have?
Opponents believe the tax could drive billionaires to relocate to lower-tax states, potentially diminishing investment in California and adversely impacting the entrepreneurial ecosystem.
Who drafted the bill?
The bill was drafted with the involvement of UC Berkeley economics professors and is backed by the Service Employees International Union.
Deeper Dive: News & Info About This Topic
- Investment News
- Wikipedia: Billionaire
- San Francisco Standard
- Google Search: California Billionaire Tax Act
- Bloomberg
- Encyclopedia Britannica: Taxation
- Sacramento Bee
- Google News: California Wealth Tax
- Wall Street Journal
- Google Scholar: California Wealth Tax
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