“We are facing literally a collapse of our health care system here in California and elsewhere,” Regan said. “This will help us keep health care facilities open. It will stabilize premiums and coverage for all Californians, protect health care jobs, and also improve public education.”
The proposed initiative would tax the 2025 net worth of billionaires residing in California, allowing them to pay off the obligation over five years. The revenue would go into a special fund with 90% reserved for health care spending and 10% reserved for K-12 education spending.
It needs 874,641 signatures to be placed before voters on the 2026 ballot, a number that the groups are confident they can reach. Getting voters to ultimately approve the tax, however, could be a hard sell.
While California has taxed the income of millionaires, lawmakers have never successfully passed a wealth tax. Instead of targeting earnings, the state would levy such a tax on the net worth of an individual, everything from investments to property value and even other assets, like jewelry and paintings.
The governor is a big reason why. Newsom has never supported a wealth tax, at times angrily rejecting conservative efforts to link him with one as “shameful.” He quashed the most recent legislative effort last year.
Democratic lawmakers this year had considered raising revenue to help support the state’s social services programs, which receive billions in federal funds annually, but pivoted to focus on Newsom’s Proposition 50 redistricting fight.
Regan said there are no plans to cut a deal with state lawmakers and pull the initiative from the ballot.
President Donald Trump’s sweeping tax reform and budget bill — the One Big Beautiful Bill Act — is projected to cut nearly $1 trillion from Medicaid over a decade. California is estimated to lose roughly $30 billion in federal Medicaid funds annually as a result. The state’s Medicaid agency estimates 3.4 million people will lose coverage as a result of federal eligibility changes.
The bulk of cuts won’t take effect until 2027. But states, including California, are already taking steps to shrink their health insurance programs for low-income and disabled individuals.
California lawmakers facing a $12 billion deficit earlier this year made cuts to the state’s insurance program for immigrants without legal status, including a partial enrollment freeze that starts Jan. 1. They also reinstituted the Medi-Cal asset test, which limits how much enrollees can have in property value and savings.
Susan Shelley, vice president of communications with the Howard Jarvis Taxpayers Association, said most Californians will probably assume that the tax will not affect them, but establishing a wealth tax in the state could create a troubling precedent.
“We tax income at a very high level, but we don’t tax wealth and assets,” Shelley said. Nearly half of the state’s personal income tax revenue comes from just 1% of the state’s earners. Over time, she added, a wealth tax “could come all the way down to the middle class and they say you have too much equity in your house and we’re taking it.”
Shelley also said the proposed initiative would incentivize billionaires to leave the state, creating a “huge hole in the state budget” that would hurt the economy in the long term.
Proponents of the measure disagreed with that characterization of the proposal. They said that it would not levy taxes on the middle class nor would it affect businesses because it targets the net worth of ultrawealthy individuals.
Emmanuel Saez, an economics professor at UC Berkeley and supporter of the proposal, said the tax is structured to prevent billionaires from avoiding the bill simply by leaving the state.
It would tax their wealth established in 2025, and any billionaires who moved to the state in 2026 would not be subject to the levy.
“California billionaires are not going to be able to avoid the tax by moving their assets outside of California,” Saez said.
