A technology mecca, California has more billionaires than any other state — a few hundred, by some estimates. Nearly half its personal income tax revenue, a financial backbone in the nearly $350 billion budget, comes from the top 1% of earners.
A large health care union is attempting to place a proposal before voters in November that would impose a one-time 5% tax on the assets of billionaires — including stocks, art, businesses, collectibles and intellectual property — to backfill federal funding cuts to health servicesr lower-income people that were signed by President Donald Trump last year.
In a state with a vast gap between rich and poor, the plan has resulted in a tangle of competing interests at a time when both Democrats and Republicans are struggling to respond to economic anxiety driven by rising costs ahead of this year's midterm elections.
An online war of words has tech leaders pondering a hollowing out of Silicon Valley, and millions of dollars are flowing to political committees engaged in the fight. That includes $3 million from billionaire Peter Theila founder of PayPal, to a committee tied to a business group opposing the tax.
However it's not clear if the proposal will make the ballot, with more than 870,000 petition signatures required for it to qualify.
Although the tax would affect only a minuscule slice of California's roughly 39 million residents, it would siphon money from an immense pool of wealth. If would apply retroactively to billionaires living in the state as of Jan. 1.
At least 25 billionaires listed among Forbes magazine’s 2025 rankings of the world’s 500 wealthiest people either lived in California or had some significant ties to the state, based on a review by The Associated Press. But determining whether they were full-time residents or just frequent visitors could turn into a matter of dispute, since many of them own property elsewhere.
“You are really playing with fire with this one,” said Aaron Levie, CEO of the publicly traded Silicon Valley company Box. He fears that the proposed tax would drive entrepreneurs to look elsewhere to run their companies and launch startups.
Even liberal-leaning tech pioneers would “find it absurd just on pure economic and structural grounds, even if they might agree that the cause itself is very worthy,” said Levie, who is not a billionaire.
Newsom has long opposed state-level wealth taxes, believing such levies would be disadvantageous for the world’s fourth-largest economy. At a time when California is strapped for cash and he is considering a 2028 presidential run, he is trying to block the proposal before it reaches the ballot.
Analysts say an exodus of billionaires could mean a loss of hundreds of millions of tax dollars.
