California Considers New Tax Targeting Billionaires
California lawmakers are considering a dramatic new proposal: a one-time 5% tax on billionaires to help cover the state’s budget shortfall and replace lost federal healthcare funding. The tax could mean:
A $12 billion one-time payment from Meta’s Mark Zuckerberg and $8 billion from Nvidia CEO Jensen Huang. Roughly 200 billionaires call California home.
The healthcare workers’ union proposing the ballot initiative says the move would raise about $100 billion and is needed to stabilize California’s strained public health insurance program, Medi-Cal, and offset impending Medicaid cuts.
Opponents warn the tax could push more wealthy residents and companies out of the state — a debate that mirrors criticism of New York City Mayor-Elect Zohran Mamdani’s “tax the rich” campaign initiative. Democratic Gov. Gavin Newsom reportedly is not on board, according to a political adviser — though he hasn’t commented publicly.
STATE OF PLAY
New York and California have the most billionaires in the U.S., but proposals from progressive lawmakers in both states could mean massive tax hikes on the group.
On the campaign trail, Mamdani said: “I don’t think we should have billionaires.”
About a third of Americans in 2020 said it is bad for the U.S. to have people with fortunes over a billion dollars, according to Pew.
Mamdani proposed a 2% tax on incomes over $1 million, which would be projected to raise $4 billion a year. The state legislature and New York Gov. Kathy Hochul (D) would need to approve the measure.
Hochul said Tuesday that she will not raise personal income taxes, despite uncertainty over federal funding and pressure from progressives. “We want to make sure that New York is more affordable for everybody and I want people who are successful to keep creating the jobs and investing here,” she said. But — in a notable shift — Hochul did not rule out other types of tax increases. State officials have already begun quietly floating a corporate tax bump.
New York’s current top corporate tax rate is 7.25%; Mamdani has proposed raising it to match New Jersey’s 11.25%.
Hochul is up for reelection next year. While raising taxes on the wealthy is politically risky, Mamdani’s decisive win on a progressive agenda — which she backed — may see her move away from more a moderate stance.