A major labor union is working to bring a new wealth tax proposal to Californians in November. But the proposal would actually affect only a small number of billionaires.
The California Billionaire Tax Act is a one-time tax that, if realized, would free up revenue from the state’s wealthiest to support a health care system that some elected officials and leaders have warned is under intense pressure from federal budget cuts.
The statewide proposal, led by Service Employees International Union-United Healthcare Workers West, has been in the works for some time. Attorney General Rob Bonta published the tax bill’s official title and summary in late December, paving the way for proponents to collect the tens of thousands of signatures they need to get this proposal on the ballot in November.
Vermont Senator Bernie Sanders took part in the campaign kickoff in Los Angeles on Wednesday, February 18, throwing out numerous figures illustrating wealth inequality in the United States and comparing billionaires paying a few billion dollars more in taxes to “pocket money.”
His clear support comes as Governor Gavin Newsom has opposed it and because the proposal has raised fears that it would force California’s wealthiest residents to flee. Representative Kevin Kiley of California’s 3rd Congressional District plans to introduce a bill against the tax proposal, saying California’s “leading job creators” should resign preemptively.
Meanwhile, Los Angeles County leaders have turned to a proposed temporary sales tax increase to offset health care cuts. In June, voters in the province will decide whether to support it.
Here’s what you need to know about the California Billionaire Tax Act.
Who is taxed under the California Billionaire Tax Act?
Californians with a net worth of $1 billion or more and certain trusts would see a one-time 5% tax, according to a filing for the proposal. Supporters said this tax would apply to about 200 people in California.
How will health care change for Californians under Trump?
President Donald Trump’s “One Big Beautiful Bill Act” implements changes to eligibility for both Medi-Cal, the state’s Medicaid program, and CalFresh, the state’s Supplemental Nutrition Assistance Program.
According to the nonpartisan Legislative Analyst’s Office, the changing work requirements, combined with the “administrative burden,” could leave one to two million people without Medi-Cal. Up to three million people could lose Medi-Cal by 2028, both as a result of OBBA and changes in California’s budget, Miranda Dietz, director of the UC Berkley Labor Center’s health care program, told California lawmakers in February.
Dietz, citing an earlier look at OBBA’s impact, said a projected $20 billion drop in federal funding would mean 200,000 fewer jobs in the state, nearly two-thirds of which are “directly” in health care.
Also at risk: Hospitals will face lower margins due to fewer Medi-Cal enrollees and more uninsured patients, said LAO’s Jason Constantouros, citing recent studies. Public hospital systems face $3.4 billion a year in federal cuts, the California State Association of Counties said in a report estimating the costs of OBBA.
What does this California wealth tax do?
The revenue would be used to meet “urgent, existing health, education and nutrition needs,” according to a filing for the initiative. Ninety percent of the revenue generated by this tax would go to the Billionaire Tax Health Account, while 10% would go to the Billionaire Tax Education and Food Assistance Account.
Where would the California Billionaire Tax Act money go?
It must generate revenue to finance health care, education and food aid through a one-time tax.
Where the money going to the Billionaire Tax Health Account could be used, according to a filing, includes:
- Expenditures to restore or address cuts or cuts
- Investments to protect or improve Medi-Cal
- Preventing or mitigating facility closures
- Other investments to support healthcare access, coverage and more
The money going into the Billionaire Tax Education and Food Assistance Account can be used for:
- Expenditures related to education and food assistance to restore or address budget cuts or budget cuts
- To make investments in the public education system or further investments in CalFresh, CalFAP, CalFood or California’s Universal Meals Program
When would this wealth tax take place?
The tax would be due in 2027, although taxpayers can choose to spread the payments over five years at a higher cost, according to the LAO.
The LAO said the wealth tax would “likely” raise tens of billions of dollars, but it is difficult to determine the exact amount. One reason is that it is “difficult to know what actions billionaires would take to reduce the amount of taxes they pay.”
Paris Barraza is a reporter covering Los Angeles and Southern California for the USA TODAY Network. Reach her out [email protected].
This article originally appeared on USA TODAY: What is the California Billionaire Tax Act? Does it actually happen?
Reporting by Paris Barraza, USA TODAY / USA TODAY
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