A labor union in California recently modified its proposal for taxing billionaires after initially qualifying it for the November ballot. The Service Employees International Union Healthcare Workers West initially proposed a one-time 5% tax on individuals with a net worth over $1 billion. The proposal faced significant opposition, including from Democratic Governor Gavin Newsom. On Thursday, the union announced it would drop the 5% tax if Newsom supported a 2% tax instead. The revised proposal would need legislative approval by June 25 to qualify for the ballot.
Governor’s spokesperson, Tara Gallegos, criticized the proposal despite the scaling back, stating that it has “fundamental flaws that harm working Californians.” Newsom supports fair taxing of the wealthy but believes this measure would hurt funding for teachers, schools, clinics, and public safety.
The proposed tax, aimed at residents as of January 1, 2026, intends to generate $100 billion. This revenue would primarily address federal healthcare cuts for low-income residents while supporting food assistance and educational programs. Proponents argue that a 2% one-time tax is modest and crucial for maintaining emergency services.
Democratic Secretary of State Shirley Weber confirmed that more than 875,000 signatures were collected to put the original measure before voters. The proposed tax has sparked division among Democrats, labor unions, and triggered expensive campaigns against it. Critics argue the tax could drive wealthy residents out of the state, reducing income tax revenue significantly.
Prominent progressives like Senator Bernie Sanders support the tax, yet Silicon Valley’s affluent tech community opposes it. Opponents include the California Medical Association and California School Boards Association, both actively working to defeat it.
California’s Legislative Analyst’s Office suggests the 5% tax might yield tens of billions initially, yet it could cause annual revenue declines of hundreds of millions. Google co-founder Sergey Brin contributed $82 million against the tax, funding “Building a Better California,” which has raised over $118 million from few donors.
Recently, state lawmakers approved budget measures to increase revenue through extending healthcare provider taxes. This approach, agreed upon by Newsom and legislative leaders, does not include the billionaire tax, as stated by Senate President pro Tempore Monique Limón. Limón noted that the budget focuses on addressing the state’s long-term financial needs without the proposed wealth tax.