Major unions in California have moved to push a so-called wealth tax, a one-time levy on billionaires in the state, to fill the gap created by federal budget cuts for low-income people. But with California Gov. Gavin Newsom, known to be progressive, voicing opposition, it is unclear whether the wealth tax will actually be implemented.
On the 13th (local time), the Wall Street Journal (WSJ) reported that the Western chapter of the Service Employees International Union (SEIU) Healthcare Workers Union proposed a ballot initiative to impose a one-time 5% tax on the portion of net worth exceeding $1 billion (about 1.5 trillion won) targeting the wealthiest Californians. Earlier, the Associated Press reported that the union submitted an application to California Attorney General Rob Bonta seeking approval to begin a signature drive to put the initiative to a vote.
The proposed measure would apply to California residents as of Jan. 1, 2026, and net worth would be calculated as of Dec. 31 of the same year. Net worth excludes real estate but includes a wide range of assets such as stocks, bonds, art and collectibles, and vehicles. The tax is designed to be paid in installments within five years.
The union said the wealth tax could raise about $100 billion (about 145 trillion won), which could be used to fill the fiscal gap caused by President Donald Trump's Medicaid cuts this year. About 870,000 signatures are required for the measure to qualify for the ballot, and the union plans to begin the signature drive in January this year.
Emmanuel Saez, a University of California, Berkeley economist who advised on the bill, said, "This would be the world's first tax imposed on the ultra-wealthy," and added, "I hope it becomes a model for the world."
This attempt aligns with a growing push in progressive-leaning areas to tax the wealthy. This month, New York mayor-elect Zohran Mamdani campaigned on imposing an additional 2% tax on the portion of annual income over $1 million (about 1.5 billion won), and Massachusetts in 2022 implemented an additional 4% tax on income over $1 million. However, the WSJ said the California proposal is tougher than those in other regions because it targets net worth rather than income or real estate.
According to asset management firm Altrata, as of last year an estimated 255 billionaires lived in California, accounting for 22% of all U.S. billionaires. This figure is based on establishment addresses, so not all billionaires would be subject to the wealth tax, but for an asset holder with $10 billion (about 15 trillion won), a one-time expenditure of $500 million (about 700 billion won) would be incurred, which could have a significant impact.
Newsom clearly expressed opposition. According to the WSJ, a spokesperson for his campaign said the governor opposes the measure, and political strategists for Newsom organized a political action committee (PAC) opposing the wealth tax to push back. PAC strategist Dan Newman argued that the union's proposal would "lead to taxing virtually everything—cars, dwellings, carts—and create a dangerous situation."
Another problem is that measuring the wealth of the rich today has become far more complicated than simply tallying an asset list. In recent years, many tech and AI startups in California have been valued between $1 billion and $10 billion, but their shares are largely private or not easily tradable, making it difficult to assess their actual value.
Joshua Rauh, a Stanford University finance professor and senior fellow at the Hoover Institution, expressed concern, saying, "If venture valuations are inflated, it could impose a heavy burden on founders." Silicon Valley investors and entrepreneurs also noted on the "All-In" podcast that the wealth tax could accelerate billionaires' exit from California.