A Desperate Tax for a Deeper Problem
- Rachel Lee
- 15 hours ago
- 3 min read
By Brandon Koo
Despite being home to over 200 billionaires, California faces serious budget deficits, particularly in healthcare. This irony has led to a proposal known as the California Billionaire Tax Act of 2026, an idealized measure that aims to stabilize the state’s finances but will ultimately drive out innovation and weaken the state’s economy.
The act requires all individuals residing in California with a net worth exceeding $1 billion to pay a one-time 5% wealth tax upon meeting residency requirements after Jan. 1. The urgency behind the proposal stems in part from the federal “One Big Beautiful Bill Act,” which reduced Medicaid funding and shifted greater financial responsibility to states, forcing California to cover major healthcare shortfalls. Rising pension obligations, housing shortages, and long-term spending growth have further contributed to recurring deficits. As of 2025, California has approximately 246 billionaires with a combined net worth of around $2.1 trillion, according to Forbes, making the state a prime target for such a policy. Proposed by Service Employees International Union United Healthcare Workers West, it requires 875,000 signatures to appear on the November ballot. Analysts from the California Legislative Analyst’s Office estimate the tax could raise approximately $100 billion for healthcare, education and social services, including programs such as Medi-Cal, which provides low-cost coverage for low-income residents. Yet, while the potential relief may sound appealing, the proposal does not address long-term structural deficits.
“Although the tax offers short-term relief, it is not a sustainable financial solution for California’s underlying budget problems,” Sophomore Mira Reddy said.
Relying on a small group of billionaire taxpayers is risky because wealthy individuals can relocate, making the
projected revenue unstable. According to filings reviewed by Fortune, Google cofounder Larry Page has already moved business entities out of California ahead of the proposed wealth tax. The New York Times reported that billionaire venture capitalist Peter Thiel has also signaled reduced ties to California. Although these moves have not yet caused a measurable decline in California’s overall economy, state analysts confirm that the departure of even a small number of ultra-wealthy residents results in immediate losses in a personal income tax revenue and reduced in-state investment. The California’s Legislative Analyst’s Office warns that such relocations could cost the state hundreds of dollars annually, since the top earners account for a disproportionate share of tax revenue. Certainly, there are billionaires like Jensen Huang, CEO of NVIDIA, who have stated they are willing to pay the taxes and remain in California. However, relying on voluntary goodwill from a few tech leaders is not a stable or realistic strategy. To avoid serious economic fallout, the state is safer pursuing long-term budget reform instead of targeting billionaires with this one-time tax.
Furthermore, if the act is passed, the tax would be collected based on net worth rather than income. This means the tax applies to external assets like stocks, private business holdings and investments, even if they are not easily liquidated. This approach would be extremely difficult to enforce and vulnerable to legal challenges. Counting hard-to-sell assets could lower the money the state actually collects and cause unnecessary disputes, making the tax more trouble than it is worth.
“Taxing net worth is risky because most wealth isn’t liquid, and forcing billionaires to sell assets could hurt workers and the broader economy,” Senior Rihito Yamaguchi said.
Instead of relying on a one-time wealth tax, California should focus on creating steadier sources of revenue. One option is to expand sales taxes to include high-end services that are currently untaxed, such as luxury consulting or investment management services mainly used by wealthy clients. This would bring in more reliable funding yearly for healthcare and education without depending on billionaires or risking major economic disruption.
Ultimately, the California Billionaire Tax Act of 2026 is not a lasting solution. While the measure may generate short-term funding for healthcare and education, in the long term money and innovation will slowly move to states with more predictable tax policies. Rather than solving the state’s deeper budget issues, the tax risks weakening the economy that has fueled the state’s success. Instead of short-term fixes, California needs to seek meaningful and realistic reform that will cultivate success for decades to come.
About the Contributor
Brandon Koo
staff writer
Brandon Koo is a sophomore at Leland High School and a staff writer for The Charger Account. He can be found on the tennis courts practicing, working out, or listening to R&B in his room. Brandon also enjoys going on sunset walks or taking bike rides on the hills.
Ryan Park
artist
Ryan Park is a junior at Leland High School who is an artist for The Charger Account. When he is not residing at the gym, he likes to mess with his cats and read manga.
