California voters consider one-time wealth tax on billionaires

California voters will decide in November whether to approve Proposition 40, a ballot measure that would impose a one-time 5% tax on the net worth of the state’s roughly 200 billionaires for a five-year period. Supporters, led by healthcare workers union leader Dave Regan, say the tax could generate about $100 billion, with 90% earmarked for health-care programs that they claim are threatened by recent federal cuts.

Regan told CBS News, "We’re not trying to pretend that it’s a permanent solution, but a five-year solution is better than no solution. And that gives the state of California an opportunity to figure out what’s the right permanent solution."

Opponents include Governor Gavin Newsom, former Congresswoman Katie Porter, and several billionaires who have left the state, such as Peter Thiel, Larry Page and Sergey Brin. Brin is reportedly spending more than $100 million to defeat the measure. Porter warned that a wealth tax could encourage high-net-worth individuals to relocate, reducing the tax base permanently.

Legal scholars note that most billionaire wealth is held in assets that are not taxed until sold, creating a gap in the current tax system. Boston College Law professor Ray Madoff described the system as "essentially writing the richest Americans out of the tax system" and said Prop 40 could have symbolic value but would not replace needed federal reforms.

Public opinion appears divided. One voter supporting the measure said it is a broader response to federal policies, while a voter opposed expressed concern about the potential exodus of wealthy residents. Nvidia founder Jensen Huang, who was contacted for comment, said he does not mind paying higher taxes but criticized wasteful spending.

If passed, Regan expects other states may consider similar initiatives, citing California’s history of pioneering policies.