California Proposes First Wealth Tax to Address Medicaid Cuts

On October 23, 2025, the Service Employees International Union–United Healthcare Workers West (SEIU-UHW) and prominent economists Emmanuel Saez and Robert Reich introduced a groundbreaking ballot measure for California's November 2026 election. This initiative, known as the "2026 Billionaire Tax Act," aims to impose a one-time 5% tax on the wealth of approximately 200 billionaires in California. The revenue generated is intended to mitigate the $100 billion shortfall in the state's Medicaid program, exacerbated by significant federal cuts enacted by President Donald Trump and the Republican Congress.

Common DreamsThe American ProspectNew RepublicWhat does a Budget for the 99.9% look like?The Local (Norway)The London Economic

The proposed tax is designed to raise funds for California's Medicaid recipients and the institutions serving them, allocating 90% of the revenue to healthcare and the remaining 10% to K-12 education. The measure allows billionaires to spread their tax payments over five years, based on their net worth in 2025. Saez highlighted that despite the tax, billionaires' wealth is projected to continue growing, as their average annual income has been increasing at 7.5%, compared to just 1.5% for median-income residents.

The American Prospect

The initiative emerges amid a broader national conversation about wealth inequality and taxation. Similar proposals have surfaced in other regions, such as Gabriel Zucman's wealth tax in France and New York City mayoral candidate Zohran Mamdani's income tax increase for high earners. The California measure is strategically crafted to avoid common criticisms of wealth taxes, such as the fear of billionaire flight, by applying only to those residing in the state as of 2025.

The American Prospect

Despite its careful design, the proposal is expected to face opposition, particularly from wealthy individuals and their advocates. Critics may label the initiative as socialistic, although evidence supporting the notion that high taxes drive the wealthy away is limited. Research indicates that high-income individuals tend to remain in high-tax states, as migration rates among millionaires are significantly lower than those of other income groups.

The American Prospect

Dave Regan, president of SEIU-UHW, expressed confidence in the initiative's potential, stating, "It is a 100% certainty that we have the ability to put this on the ballot in 2026." Emmanuel Saez emphasized the necessity of the tax, noting, "The wealth of California billionaires has exploded in recent years while health and education in California are getting defunded by the Trump administration." Robert Reich characterized the federal Medicaid cuts as a "manufactured crisis," advocating for the tax as a practical solution to sustain the healthcare system.

Common Dreams

The introduction of the wealth tax in California could set a precedent for similar initiatives across the United States, particularly in states facing similar fiscal challenges. It reflects a growing public sentiment favoring increased taxation on the wealthy to address systemic inequalities and fund essential services. As the initiative progresses, it may influence political discourse and strategies in upcoming elections.

The American Prospect

The SEIU-UHW and its coalition have until June 2026 to gather approximately 874,000 valid signatures to qualify the measure for the ballot. If successful, the outcome of the vote could have significant ramifications for California's healthcare system and the national conversation surrounding wealth taxation.

Common Dreams