In Sacramento, California, a labor union proposed a tax aimed at billionaires that recently qualified for the November ballot. The Service Employees International Union Healthcare Workers West initially suggested a one-time 5% tax on individuals with a net worth over $1 billion. However, they have offered to revise the proposal to a 2% levy if Democratic Governor Gavin Newsom supports it.
The reduced proposal, which must be passed by the Legislature before the June 25 deadline to qualify for the ballot, continues to draw criticism. Governor Newsom’s spokesperson, Tara Gallegos, stated that the proposal’s fundamental issues remain. She argued it would harm working Californians by defunding essential services like schools and public safety.
The tax aims to generate $100 billion, countering federal healthcare cuts for low-income individuals, along with funding for food assistance and education. Supporters argue that a 2% tax on accumulated wealth is reasonable if it means preserving crucial services. Meanwhile, prominent progressives, including Senator Bernie Sanders, back the tax, but it faces opposition from Silicon Valley moguls and various California associations.
Critics believe the measure could drive billionaires out of the state, decreasing income tax revenue crucial to California’s economy. Some argue that it poses risks to small businesses and working families. The Legislative Analyst’s Office estimates the original 5% tax could initially generate significant revenue, but anticipate a decline in income tax revenues subsequently.
Since the proposal’s announcement, Google co-founder Sergey Brin has donated $82 million to campaigns opposing the tax. Overall, more than $118 million has been raised to counter the proposal. Meanwhile, California lawmakers have passed budget bills to raise revenue, excluding the billionaire tax. Senate President pro Tempore Monique Limón noted that the budget includes additional revenues focused on addressing long-term financial challenges.
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