Sen. Bernie Sanders is headlining a Los Angeles rally this evening to drum up support for a proposed one-time 5% wealth tax on billionaires in California — the latest sign of an escalating battle over Silicon Valley wealth, income inequality and affordability. That fight now pits Sanders, the democratic socialist from Vermont, against Gov. Gavin Newsom, who has opposed the tax initiative and worked to keep it off the ballot in the upcoming November elections.
What this clash is about: A healthcare workers’ union, the Service Employees International Union – United Healthcare Workers West, has proposed a ballot initiative calling for California billionaires to pay a one-time, “emergency” tax of 5% of their total assets over five years to help fund healthcare, public schools and food assistance programs.
The union argues that the tax is necessary because of deep federal spending cuts enacted under the Republican “One Big Beautiful Bill Act” that are expected to cost California roughly $100 billion in healthcare funding over the next five years. The tax would target Californians worth more than $1 billion — about 200 people in total, who collectively have $2 trillion in wealth, according to the union. The initiative is intended to raise about $100 billion to replace the federal dollars being cut. Fully 90% of the money that would be raised by the tax would go to funding healthcare through Medi-Cal, the state’s Medicaid program.
“This would protect healthcare jobs and ensure working people and families can get the care they need,” the union said in a statement.
Supporters of the proposal, titled The California Billionaire Tax Act, are working to collect the nearly 900,000 signatures needed to get it on the ballot. Sanders, who won the Golden State’s 2020 Democratic presidential primary, is the featured speaker at an event tonight kicking off the campaign to promote the initiative.
Newsom, who is considering his own presidential run in 2028, has raised concerns that the tax would harm innovation and that billionaires would flee California and potentially leave a future hole in the state budget — though the California proposal would apply retroactively and cover worldwide assets, not just those in the state. Newsom has argued that any wealth tax should only be considered at the national, not state, level.
Some of Silicon Valley’s tech titans and other business leaders in the state have already taken steps to cut their ties to the state — and some opponents of the billionaire tax have ramped up efforts to defeat the proposal or are spending millions to push competing measures that would block it. Other opponents of the plan worry that it directs too large a share of its revenue to healthcare, leaving little for other funding needs.
Why it matters: The battle over the billionaire tax is one high-profile example of the pressures states will face and the decisions they will be forced to make due to federal funding cuts. Beyond California’s healthcare and budget concerns, the debate is dividing prominent Democrats and contributing to tensions between progressives and centrists at a time when the party is trying to come together, hone its messaging and position itself for success in the 2026 and 2028 elections.