California to decide if billionaires pay one-time 5% fee for healthcare

California voters face a pivotal decision this November on whether the state’s ultra-wealthy residents should pay a historic one-time tax to support the public healthcare system. Proposition 40, which appears on the ballot, would impose a 5% levy on the net worth of everyone in the state with a fortune of at least $1 billion. This measure targets a group of more than 200 individuals, including prominent figures such as Mark Zuckerberg, Oprah Winfrey, George Lucas, and Kim Kardashian.

Proponents argue the measure is a necessary step to generate approximately $100 billion in new revenue. These funds are intended to replace federal healthcare financing lost due to recent federal tax and spending legislation. Suzanne Jimenez, a representative for the Service Employees International Union-United Healthcare Workers West, described the plan as a temporary fix. She warned that without this intervention, the state’s healthcare infrastructure could collapse before a permanent funding source is established.

California currently possesses the largest economy in the United States and ranks fourth globally, surpassing the economic output of nations like India and the United Kingdom. Despite this wealth, the state also holds the highest number of homeless people in the country and exhibits one of the widest disparities in income distribution. Francesco Trebbi, a public policy professor at the University of California, Berkeley, noted that this proposal is likely the first tax of its kind to target such an extreme segment of the wealth hierarchy.

Governor Gavin Newsom, whose term is concluding, has emerged as the most visible critic of the proposal. He argues that the tax may incentivize wealthy residents to relocate, thereby reducing the state’s income tax base. This concern has been echoed by some residents who have already moved. Reports indicate that at least six billionaires, including Google cofounders Larry Page and Sergey Brin, have left the state. Peter Thiel, former Uber executive Travis Kalanick, and Don Hankey are among those who have also departed.

Don Hankey, founder of the Hankey Group, told Forbes that he relocated to Nevada because the proposal made him feel unwelcome, despite the jobs his companies had created. Mark Zuckerberg informed Meta’s board last month that he is considering moving his primary residence out of the state. To offset potential losses from the tax, Meta agreed to a new stock deal that grants Zuckerberg additional shares. He could owe up to $12.5 billion if the measure passes. Andy Fang, a cofounder of DoorDash, criticized the idea as foolish.

Supporters among the wealthy argue the tax is fair given their income levels. Jensen Huang, the chief executive of Nvidia, stated in an interview that he does not mind paying taxes and believes those with more wealth should pay more. Senator Bernie Sanders reinforced this view at a recent rally in Los Angeles, suggesting that billionaires feel they have a divine right to rule. He predicted that voters would send a strong message on November 3.

Public opinion remains divided. A September poll conducted by the Los Angeles Times and the Berkeley Institute of Governmental Studies found that 45% of likely voters support the measure, while 42% oppose it and 13% remain undecided. A simple majority is required for passage. Sergey Brin has donated more than $100 million to a political organization that is funding efforts to block the measure, according to reports from the Los Angeles Times.

The debate is part of a broader national trend addressing economic inequality. Washington state is also considering a tax on high earners. In Europe, wealth taxes have become rare, with only Spain, Norway, and Switzerland maintaining them. Experts note that US inequality is near its highest level in over three decades, with the top 1% of households holding nearly 32% of the nation's wealth. Many Californians feel the gap between the rich and poor is widening and believe the state government should take action to address the imbalance.