Billionaire tax divides California Democrats, draws myriad questions

California’s Proposition 40 has divided Democrats over how to fund healthcare after federal spending cuts. The ballot measure would impose a one-off tax equal to 5% of the wealth of people whose assets exceeded $1 billion and who lived in California on 1 January 2026. Its sponsor, the healthcare workers’ union SEIU-UHW, estimates it would raise about $100 billion over five years. The proposal directs 90% of the proceeds to healthcare, with the rest for food assistance and education. The California Democratic Party backs it, as do Senator Bernie Sanders and Representative Ro Khanna, while Democratic Governor Gavin Newsom opposes it.

Supporters say the levy could help protect hospitals, clinics and patients from federal cuts. Opponents, including some healthcare and labour groups, question whether a one-off tax can meet continuing costs and warn that wealthy residents may leave, reducing future income tax receipts. The state’s official fiscal analysis projects tens of billions of dollars in temporary revenue but allows for an ongoing loss of less than $1 billion a year in income tax revenue from billionaires. Two other propositions could nullify the wealth tax even if voters approve it, adding a further question to an already complex ballot decision.