California, October 25, 2025

News Summary

California is introducing a proposal for a one-time 5% tax on residents with a net worth over $1 billion. The initiative, named the ‘2026 Billionaire Tax Act,’ aims to address a $30 billion healthcare funding shortfall in the state, directing 90% of the proceeds to healthcare and 10% to K-12 education. To qualify for the November 2026 ballot, supporters must gather 875,000 signatures. While proponents view it as a fair approach to address wealth inequality, critics warn it may drive billionaires out of the state.

California Proposal for One-Time 5% Tax on Billionaires

A new proposal in California aims to levy a one-time, 5% tax on residents with a net worth exceeding $1 billion. The initiative, known as the “2026 Billionaire Tax Act,” was submitted to the California Attorney General’s office and is intended to address a projected $30 billion annual health care funding shortfall in the state.

If the proposal is approved, it could be placed on the November 2026 ballot, but first, it will need to gather nearly 875,000 signatures from California voters to qualify. Should it pass, the tax would allocate 90% of the new revenue to health care initiatives and 10% to K-12 public education. The collected revenue will be capped at $25 billion per year and stored in a separate “Billionaire Tax Reserve Account.”

The basis for this tax is rooted in the belief that billionaires’ wealth has “largely escaped fair taxation,” contributing to growing economic inequality. Under this proposal, all California residents would be required to declare their total net worth, which would include assets in private companies, real estate, and art. Tax payments could either be made in full or spread out over five years, bearing interest. Additionally, substantial penalties would be imposed for any underreporting of wealth.

California is home to approximately 180 billionaires with a combined wealth of around $2 trillion. The proposal was drafted with input from economists at UC Berkeley and is supported by the Service Employees International Union.

However, not everyone is in favor of the tax. Critics argue that it may encourage billionaires to relocate to states with lower tax burdens, consequently diminishing investment in California. Proponents suggest that it represents a modest and equitable approach to taxation in light of the substantial asset growth of the wealthiest Californians. The tax specifically targets unrealized gains and asset values, which might present challenges for financial advisors handling these calculations.

The initiative is framed as a way to increase state revenue without raising taxes on working and middle-class residents. Opponents worry that the proposal could have adverse effects on California’s entrepreneurial ecosystem and overall capital investment conditions.

The California Attorney General’s office is expected to provide a formal title and summary of the initiative within the coming weeks. If successful, California could become the first state in the United States to implement a direct wealth tax targeting billionaires. This proposal also follows recent data indicating that non-billionaire Californians face an average tax burden that is 6% higher than their economic income in taxes. Overall, this initiative is part of a broader trend toward taxing extreme wealth at both state and potentially federal levels.

Key Features of the 2026 Billionaire Tax Act

• Proposed as a one-time 5% tax for billionaires.
• Intended to address a $30 billion healthcare funding shortfall.
• Requires 875,000 signatures to qualify for the November 2026 ballot.
• 90% of revenues allocated to healthcare, 10% to K-12 education.
• Revenue capped at $25 billion per year.
• Approximately 180 billionaires in California with a total wealth of $2 trillion.
• Written with the input of UC Berkeley economists.

FAQ

Deeper Dive: News & Info About This Topic

• Investment News: California’s Proposed Billionaire Tax
• Wikipedia: Wealth Tax
• SF Standard: California Billionaire Tax Act
• Google Search: California Billionaire Tax Act
• Bloomberg: California Billionaires Proposed 5% Tax
• Encyclopedia Britannica: Taxation
• Sacramento Bee: Billionaire Tax News
• Google News: California Wealth Tax
• LA Times: Efforts to Tax Extreme Wealth
• CBS News: Wealth Tax in 8 States

Author: STAFF HERE HOLLYWOOD

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