California’s healthcare workers’ union spent months gathering signatures for a one-time 5% tax on the state’s billionaires. A day after officials confirmed it had enough signatures for the November ballot, the same union offered to cut the rate to 2%. Governor Gavin Newsom turned it down.
The proposal arrived on Thursday in a letter to Newsom from Service Employees International Union-United Healthcare Workers West (SEIU-UHW), the initiative’s sponsor.
Back a 2% version through the state legislature, the letter proposed, and the union would withdraw its 5% measure before a June 25 deadline. Backers called the smaller levy modest if it meant “keeping emergency rooms open and saving patient lives.”
Newsom rejected the overture almost as fast as it landed. Reducing the rate, his office said, does nothing to fix a “poorly designed state-only measure” that he argues would defund teachers, schools, clinics, and public safety. He has opposed a California wealth tax since 2020, and a budget passed this week leans on an extended levy on healthcare providers instead.
On paper, the measure would impose a one-time 5% charge on any California resident whose net worth topped US$1 billion on January 1, 2026. Proponents estimate US$100 billion in revenue, most of it to backfill federal healthcare cuts signed into law last year, with smaller shares for food assistance and public education. About 200 residents fall within reach, by the union’s count.
Six billionaires had already left before the January cutoff. By the union’s own math, their exits erased roughly US$26.8 billion in taxable wealth, more than a quarter of the projected take. The nonpartisan Legislative Analyst’s Office expects the tax to raise tens of billions early, then push annual income tax revenue down by hundreds of millions as the wealthy relocate.
California draws nearly half its personal income tax from the top 1% of earners, so the prospect of an exodus animates the opposition. Sergey Brin, one of the Google founders who left, has put US$82 million into Building a Better California. It has raised more than US$118 million from fewer than a dozen donors, and is advancing measures to blunt the tax if voters approve it.
SEIU-UHW has until June 25 to pull the measure. Absent a deal, the 5% question reaches voters in November, with or without its authors’ enthusiasm.
