The labor union funding California’s Billionaire Tax Act initiative filed more than 1.5 million signatures on April 27, almost double the 875,000 needed to put the measure on November’s ballot. California voters are now a step closer to driving out one of the last remaining engines of economic growth in their state, which is already losing entertainment, manufacturing, and energy jobs.
The ballot measure is sponsored by the Service Employees International Union-United Healthcare Workers West, which represents hospital staff mostly at nonprofit entities such as Kaiser Permanente, Sutter Health, and Dignity Health. It has also been endorsed by the American Federation of State, County and Municipal Employees California, Teamsters California, plus Sens. Chris Murphy (D-CT) and Bernie Sanders (I-VT), and Silicon Valley’s congressman, Rep. Ro Khanna (D-CA).
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The measure would amend the state’s constitution to allow California to tax “all forms of personal property and wealth, whether tangible or intangible” at a rate of 5% on all individuals with assets valued at $1 billion or more. It is being sold to voters as a “one-time” tax, but it empowers the legislature to amend the tax by statute, so Democrats in Sacramento could create an annual tax on wealthy Californians, which they have been seeking for years.
The SEIU claims the tax will raise $100 billion over five years with no long-term reduction in revenue from billionaires leaving the state. This is nonsense. The California Legislative Analyst’s Office estimates that the tax would raise only “tens of billions of dollars” in the short term but would cost California “hundreds of millions of dollars or more per year” in the long term as billionaires leave the state to escape the tax. Other economists have offered even grimmer projections. The Tax Foundation found that California has already lost $777 billion in wealth from billionaires leaving the state, with long-term revenue losses reaching $4.5 billion annually.
The billionaire tax is especially ill-suited for California’s massive tech and innovation industry in Silicon Valley, which depends on risk-taking, illiquid equity, and founders willing to build for the long term. A wealth tax would punish paper gains before profits became real, encourage relocation before startups mature, and make California less attractive to investors and entrepreneurs whose companies drive the state’s innovation economy.
California used to be a leader in entertainment, manufacturing, and energy job growth, but its environmental radicalism, strict union regulation, and high taxes have hit all those industries, and they are now shrinking. Since recovering from the pandemic, California has added only 300,000 private-sector jobs, compared to 800,000 in Florida and 1.2 million in Texas. Take out healthcare-sector jobs, which are funded by federal and state taxpayers, and California has actually lost jobs.
THE LEFT’S EMBRACE OF POLITICAL VIOLENCE
In essence, California’s proposed billionaire tax would redistribute money from the only remaining productive and growing sector of its economy to what has become the biggest drain on the state budget: the healthcare system. Between state and federal funding, California spends over $200 billion a year on Medi-Cal, the state’s Medicaid system. Revenues from the billionaire tax would not be sent to California’s general fund. Instead, the measure would create a new “Billionaire Tax Reserve Fund” to receive its revenues, 90% of which must be spent on healthcare.
Gov. Gavin Newsom (D-CA) opposes the tax, but he is confronted by his own rhetoric. For years, he and the Democratic Party have told voters their expensive government could be financed entirely by 1% of the population and that the remaining 99% would not need to pay more. The SEIU’s billionaire tax is a fraud, but it is also Newsom’s own rhetoric coming back to bite the governor and the state.
