The proposal from the Service Employees International Union Healthcare Workers West to impose a one-time, 5% tax on individuals whose net worth exceeds $1 billion faces staunch pushback from a wide swath of critics, including Democratic Gov. Gavin Newsom. The union said Thursday that it would abandon the 5% tax proposal if Newsom would join them in supporting a 2% levy. The updated proposal would instead have to be passed by the Legislature, given a June 25 deadline for the measure to qualify for the ballot.
Tara Gallegos, a spokesperson for Newsom, said scaling it back doesn’t change its “fundamental flaws that harm working Californians.”
“The Governor supports making the wealthiest Americans pay their fair share, but this poorly designed state-only measure will defund teachers, schools, clinics, and public safety,” she said in a statement.
The tax, to be paid by those living in the state as of Jan. 1, 2026, is meant to generate $100 billion in revenue, mainly to counter federal cuts to healthcare for low-income people with some money going to food assistance and education programs.
“A 2% one-time tax on that accumulated wealth is modest by any objective measure especially if it means keeping emergency rooms open and saving patient lives,” backers wrote in a letter to Newsom.
Secretary of State Shirley Weber, a Democrat, said Wednesday night that petitioners collected more than the roughly 875,000 signatures needed to place the original proposal before voters.
“This flawed measure is the wrong approach for California’s small businesses and working families,” said Roger Salazar, a spokesperson for Golden State Promise, a political committee fighting the tax.
The nonpartisan Legislative Analyst’s Office estimates that the 5% tax would generate tens of billions of dollars in the first few years, but that income tax revenues could subsequently decline by hundreds of millions of dollars annually.
State lawmakers passed budget bills this week that aim to raise revenue in other ways, including by extending a tax on healthcare providers. Newsom and legislative leaders agree to this approach, Senate President pro Tempore Monique Limón said.
“The budget, as approved by the Legislature and now being negotiated with the Governor, does not include the billionaire’s tax,” the Democrat said in a statement. “Instead, it reflects additional revenues to address our long-term structural deficit.”
