Overview of Can California Actually Make Billionaires Pay?
This New Yorker episode of The Political Scene examines Proposition 40, a California ballot measure backed by SEIU United Healthcare Workers West that would impose a one-time 5% tax on the net worth of billionaires in the state. The goal is to raise roughly $100 billion to help offset severe healthcare cuts tied to federal policy. The conversation centers on whether the proposal is legally sound, politically viable, and part of a larger wave of economic populism aimed at taxing extreme wealth.
What Proposition 40 Would Do
- Tax base: California residents with a net worth of $1 billion or more
- Tax rate: 5% one-time levy on net worth
- Expected revenue: About $100 billion
- Main uses of funds:
- 90% for healthcare
- 10% for food assistance and public education
The measure is designed as a ballot initiative rather than a legislative bill, which its backers say is the only realistic way to get around political resistance in Sacramento.
Why Supporters Say It’s Necessary
Dave Regan, president of SEIU United Healthcare Workers West, frames the tax as a response to a looming healthcare emergency caused by federal cuts. His core arguments are:
- Billionaires pay lower effective tax rates than many working professionals.
- Their wealth has grown dramatically faster than the tax system can capture.
- California’s healthcare system is facing severe strain, including:
- millions projected to lose coverage
- major job losses in healthcare
- financial instability for hospitals and clinics
He argues that the tax is not punitive but a practical way to restore funding for essential services.
How the Tax Would Work
The discussion spends a lot of time on the mechanics:
- The tax would apply to people who are California residents on Jan. 1, 2026
- Wealth would be valued at the end of 2026
- Regan argues this is not truly retroactive, but rather a standard calendar-year tax structure
- The California Franchise Tax Board would handle enforcement and valuation
He also notes that a large share of billionaire wealth is in publicly traded stocks, making valuation relatively straightforward compared with ordinary assumptions about hidden assets.
Legal and Political Obstacles
The interviewer raises concerns about whether the measure could be challenged as an unconstitutional retroactive tax. Regan’s response:
- The legal structure is “settled law”
- The initiative is designed to fast-track litigation
- Any challenge would go first to the California Supreme Court, then potentially to the U.S. Supreme Court
- To challenge it, opponents would first need to pay the tax, which is built into the measure
Politically, the proposal faces intense resistance from wealthy tech figures and from Governor Gavin Newsom, who fears billionaires could leave the state. Regan rejects that concern as a distraction and says the state’s residents and healthcare system should come first.
Supporters and Opponents
Supporters
- SEIU United Healthcare Workers West
- Bernie Sanders
- Ro Khanna
- Several major labor groups, including:
- AFSCME in California
- Teamsters
- hotel workers
- likely the California Labor Federation
Regan says the measure is broadly popular across most demographic groups, with the main exception being Republicans.
Opponents
- Gavin Newsom
- Wealthy Silicon Valley donors, including Sergey Brin and Eric Schmidt
- Organizations such as Planned Parenthood and the California Medical Association are also mentioned as opponents, though Regan suggests their resistance is driven by political pressure and short-term thinking
He claims anti-tax forces have already poured huge sums into:
- lobbying
- glossy mailers
- digital ads
- TV campaigns
- competing ballot measures, Props 41 and 42
The Bigger Political Argument
The episode places Proposition 40 in the context of a broader populist mood in American politics:
- Rising anger at inequality and affordability
- The idea that the system is tilted toward billionaires
- Comparison to figures like Zohran Mamdani as part of a wider anti-elite energy
Regan argues this tax is both:
- a healthcare funding fix
- and a symbolic test of whether democratic institutions can still make the ultra-wealthy contribute proportionally to public goods
Main Takeaways
- Proposition 40 is a direct-democracy attempt to do what legislatures have repeatedly blocked: tax billionaire wealth
- Supporters see it as an urgent emergency response to healthcare cuts, not an ideological stunt
- Critics worry about legality, migration, and precedent
- The campaign has become a proxy battle over economic fairness, political power, and the role of billionaires in California
- Regan’s bottom line: if the system is going to keep functioning, the wealthiest people have to help pay for it