When California voters go to the polls next month, a decision awaits on a unique proposal to tax billionaires. Proposition 40 aims to implement a novel tax plan, unlike anything seen worldwide, as healthcare workers union leader Dave Regan describes it.
“We are facing an emergency,” stated Regan. This emergency originated from President Trump’s “One Big Beautiful Bill,” involving cuts to federal Medicaid funding in the coming years.
Regan aims to restore $100 billion in healthcare cuts, which he argues threaten the insurance of 3.5 million people and the viability of hospitals and clinics. His approach involves a one-time 5% state tax on the net worth of about 200 California billionaires, known as Proposition 40.
Regarding its potential passage, Regan feels “pretty confident.” Although his methods are contentious, and his actions are under scrutiny, he hopes to raise $100 billion over five years, with 90% designated for healthcare. Regan emphasizes this is not a permanent fix but a temporary measure.
When asked if the five-year tax offers a solution, Regan asserts, “Absolutely. Ask the 3.5 million people who are going to lose healthcare coverage.”
Competing Propositions
Since the proposal’s introduction, some billionaires have departed California, such as venture capitalist Peter Thiel and Google co-founders Larry Page and Sergey Brin. Brin alone has invested over $100 million to combat the measure.
Meanwhile, Propositions 41 and 42, backed by opposition groups, could nullify the wealth tax if either garners more votes than Prop 40. Notably, several major unions and prominent Democrats align with these opposing measures, including California Governor Gavin Newsom and former Congresswoman Katie Porter. They argue that the tax might drive billionaires away, thus diminishing the state’s tax base.
Taxes often get complicated. Billionaires may pay substantial amounts in income, property, and capital gains taxes, yet much of their wealth grows untaxed in stocks.
“The tax system excludes America’s richest much like pre-revolutionary France’s aristocracy,” said Boston College Law’s Ray Madoff. She believes Prop 40 highlights a “deeply broken” tax system and could instigate national change.
She added, “While meaningful change requires federal action, Prop 40 could serve as a catalyst.”
California as a Trendsetter
As the vote nears, opinions split further. Supporters view it as a challenge to the Trump administration, while opponents worry about people leaving the state. Notably, billionaire Jensen Huang, CEO of Nvidia, supports tax responsibility yet disapproves of waste. A former dishwasher turned elite entrepreneur, Huang embraces paying taxes, seeing it as a privilege.
“I represent the ultimate American dream,” he remarked. “If not for the opportunities in this country, I wouldn’t have created Nvidia.”
Whether for or against the tax, Regan intends to look beyond California, suggesting other states might adopt similar measures. “California is always ahead, and soon others will follow,” he predicts.
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