A controversial proposal that would impose a one-time 5% tax on the wealth of billionaires in California will be put before voters in November after Gov. Gavin Newsom failed to reach a deal with the union behind the measure by the deadline to withdraw ballot initiatives on Thursday. 

Opponents of the measure—a group that includes Newsom, as well as a number of Silicon Valley tech giants, advocacy groups, and other lawmakers in the state—argue that it will hurt California’s economy by driving out its billionaire residents, who collectively hold over $2 trillion in wealth, almost 30% of that possessed by all the billionaires in the U.S. 

But proponents of the measure, such as Independent Sen. Bernie Sanders of Vermont and other progressives, say the tax is necessary to offset federal spending cuts and would be funnelled into vital sectors like healthcare, primarily, education, and food assistance. 

“Enthusiasm for the billionaire tax is unlike anything we have seen before,” said Debru Carthan, the vice president of the union sponsoring the bill, SEIU-United Healthcare Workers West, at a Thursday evening press conference. “The billionaire tax will be on the November ballot and we intend to win.”

The union garnered over 1.5 million signatures in support of putting the measure on the ballot, it reported, far surpassing the 874,641 required to qualify. If passed by voters in the fall, the measure would create the “2026 Billionaire Tax Reserve Fund,” with 90% of the revenue gathered from the tax allocated to healthcare and 10% to food assistance or education-related programs.

Newsom previously rejected a compromise offer from the union to drop the ballot measure by Thursday’s deadline if the governor backed legislation to impose a scaled-back 2% version of the tax.

SEIU-United President Dave Regan, who pledged he was “all in” on the measure, said following Newsom’s rejection of that offer that governor “would not entertain any proposal or any compromise to tax billionaires,” and accused him of being in “lockstep” with the state’s billionaires. 

Billionaires in California have poured millions into an opposition campaign through the political committee Building a Better California. The committee, which supports multiple initiatives aimed at undercutting the effects of the billionaire tax, has received over $118 million from 10 donors, many of them tech moguls. Among them is Sergey Brin, Google’s co-founder, who donated $82 million. 

SEIU-United, meanwhile, spent around $31 million in the campaign to get the measure on the ballot.

“The billionaire class no longer sees itself as part of American society,” Sanders said at a Los Angeles rally in February. “They believe they have the divine right to rule and are no longer subject to democratic governance.”

Democratic Rep. Ro Khanna, who representsSilicon Valley, said “it makes no sense to me why any Democratic elected official or traditional Democratic allies wouldn’t be supporting this.”

“It also matters for the country at a time when we have Elon Musk becoming a trillionaire, are we really debating whether we should have a 5% tax?”

Top California lawmakers oppose the proposal

Newsom has been a vocal opponent of the proposed tax in his state. He has, though, expressed his support for such a measure on the federal level. 

“Here is what I support: A national billionaires’ tax,” Newsom wrote in a post on his Substack on Friday, which was accompanied by a video. 

“You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do,” the governor wrote. “Wealth is movable, and it shops for the state with the lowest taxes. The fight belongs at the federal level, where this broken system was created in the first place.”

Newsom further argued that the proposed tax in California ignores key sectors, such as the public school system, housing, childcare, and public safety workers. “This measure dedicates almost all of the revenue it raises to a single category of state spending,” he wrote.

Newsom’s likely successor, Democratic gubernatorial nominee Xavier Becerra, has also expressed his opposition to the proposal.

“Yes to real revenue, but no to this initiative,” Becerra said in a statement to Politico. “Every Californian must pay their fair share, and no billionaire should pay taxes at rates lower than teachers, firefighters or nurses. But this is sketchy policy.”

The Republican nominee in the governor’s race, Steve Hilton, also publicly denounced the bill during his podcast, “The Steve Hilton Show,” in an episode titled: “Billionaire Tax DESTROYS California Overnight!”

Other California lawmakers, including Democratic Reps. Zoe Lofgren and Sam Liccardo, have shared their skepticism about the proposed tax. 

“Everybody should be paying their fair share, but if people can up and flee, I’d rather see something done at the national level,” said Lofgren. 

Liccardo, who formerly served as mayor of San Jose, told Bloomberg, “I’m not at all sympathetic to the billionaires whining about possible taxes, but it’s not at all clear to me that the proposed ballot measure would work and not backfire.”

San Francisco Mayor Daniel Lurie also said he thinks the wealth tax is “the wrong measure” while speaking to an audience in January, expressing a similar view to Newsom’s. 

“Everybody should be paying their fair share,” Lurie said. “But if people can up and flee, I’d rather see something done at the national level.”