California’s proposed billionaire tax may have unintended consequences for everyday residents, not just the state’s wealthiest, suggests a leading business group in Sacramento.
The California Business Roundtable, which advocates for the state’s major employers, expressed concerns in a memo that the tax, having gathered over 1.6 million signatures and set for a voter decision in November, might eventually be applied to individuals below the billionaire threshold.
Rob Lapsley, the group’s president, highlighted a provision in the proposal that permits legislators to adjust the tax with a two-thirds majority in the state Assembly and Senate, provided the changes “further the objectives” of the 5% wealth tax aimed at billionaires.
“Proponents claim this targets only billionaires, yet the wealth tax was crafted to allow Congress more leeway in modifying the Billionaire Tax Act of 2026 than voters might anticipate,” Lapsley stated in a communication to Business Roundtable members and other concerned parties.
“This opens the door for Congress to alter any aspect of the initiative, such as changing the $1 billion threshold, making the tax permanent, or eliminating exemptions for real estate and retirement accounts,” the memo asserts.
The lead backer of the billionaire tax, SEIU United Health Care Workers West, dismissed Lapsley’s interpretation, labeling it a blatant falsehood. SEIU-UHW Secretary of State Suzanne Jimenez remarked that the business group “continues to overlook that the ‘Big Beautiful Bill”s federal healthcare cuts are already impacting the businesses they represent.”
“There’s no amendment that can change the core intention of this law, which is to impose a one-time tax on billionaires, as outlined in Section 50310 of the Billionaire Tax Act,” she continued.
Jimenez insisted that expanding the tax to include middle-class residents or making it a permanent fixture would contradict the law’s intent. “The goal is to generate revenue for health care, education, and food assistance by implementing a narrowly focused one-time tax effectively applied to all billionaires in the state,” she added.
Supporters of the billionaire tax project that it could generate up to $100 billion over five years to support initiatives that have suffered due to federal budget cuts instigated by Republican lawmakers.
Other stipulations require taxpayers to affirm they are not millionaires and allow the state Franchise Tax Board to conduct audits to uncover tax fraud, as outlined by Lapsley in the memo.
Lapsley’s concerns were echoed by Republican Representative David Tangipa and tech investor Chamath Palihapitiya, who characterized the tax as a “Trojan horse” that could inadvertently impact less affluent Californians.
“Here’s a question for you: If this is truly meant for billionaires, why does the language allow for amendments?” Palihapitiya tweeted, referring to the provision permitting legislative alterations.
The Tax Foundation, a think tank based in Washington, D.C., recently evaluated the potential for extending the billionaire tax.
Senior Fellow Jared Walczak noted in a blog post that similar initiatives like New York’s millionaire tax, initially intended as temporary in 2009, have been extended repeatedly. He suggested that new taxes often “manage to stay.” While extending the billionaire tax would necessitate “creative” legal interpretations, it might encounter challenges if tested in court. Still, it could heighten the chances of future permanent wealth tax proposals, Walczak stated.
Despite the support from figures like Senator Bernie Sanders and Representative Ro Khanna, Governor Gavin Newsom has expressed opposition to the measure and is allegedly taking steps to obstruct it.
Stop the Squeeze, a group opposing the tax and led by venture capitalist Ron Conway, warned that the tax could result in the loss of 100,000 jobs while diminishing tax revenues as wealthy individuals relocate to jurisdictions with lower taxes.
Google co-founder Sergey Brin, who recently moved to a $42 million home in Nevada to avoid the tax, reportedly harbors significant resentment toward the billionaire tax, partly due to his background.
