Wealthy tax supporters suggest 2% middle ground to Gavin Newsom

California Billionaire Tax Initiative Faces Challenges

Supporters of a contentious tax initiative aimed at billionaires in California are pushing Governor Gavin Newsom to back a revised version of the proposal. They argue that a one-time tax on the state’s wealthiest residents is essential to avert what they describe as an impending health crisis.

The Billionaire Tax Now Coalition, which receives support from the Service Employees International Union West Health Care Union, sent an open letter to Newsom suggesting a reduction of the tax rate from 5% to 2%. They propose this scaled-back figure in hopes he will endorse the bill as a temporary measure to help offset significant federal cuts to healthcare funding.

In their letter, the coalition emphasized, “We stand ready to work with you to enact a 2% version of the initiative, rather than the original 5% version.” This proposal has recently qualified for California’s November ballot following the verification of enough signatures by state election officials.

As it currently stands, the initiative intends to impose a one-time 5% tax on residents with a net worth exceeding $1 billion as of January 1, 2026. Proponents estimate this measure could generate around $100 billion from about 2,000 billionaires, channeling 90% of the funds toward healthcare while the remainder would support education and food assistance programs.

The SEIU-UHW-led coalition argues that this tax is crucial for recovering losses in healthcare funding attributed to a tax and spending overhaul referred to as the “One Big Beautiful Bill Act” by previous federal leadership.

According to the California Department of Health Services, these federal changes could potentially cost the state approximately $30 billion annually, impacting around 14 million residents who rely on Medi-Cal.

The coalition noted that the proposed 2% tax could serve as a temporary fix while the state formulates a long-term funding strategy. They contend that without the tax, up to 150,000 healthcare jobs could be at risk, hospitals and clinics may face closures, and 3.2 million Californians could lose their health insurance. Furthermore, they warned that failure to act could lead to increased costs for more than 20 million residents in terms of premiums, deductibles, and copays.

“When hospitals close and costs are transferred to working families, patients die,” the coalition emphasized. “These are not abstractions, these are preventable deaths.”

Newsom has consistently opposed raising taxes during his time in office, expressing concern that it may drive wealthy individuals and businesses away from California.

Opponents of the initiative, including some Silicon Valley donors and various business groups, argue that implementing a wealth tax could worsen the outmigration of affluent residents from states that are already heavily dependent on high-income earners for tax revenues.