California Wealth Tax Proposal Could Fund Health Care, but Timing and Use Remain Uncertain
A proposed one-time tax could raise billions for California health care, though the amount, timing and long-term effects are unclear.
California’s proposed tax on billionaires could direct billions of dollars toward health care as federal funding reductions threaten coverage and services. But the plan leaves key questions open: how much it will raise, when the money will arrive, and which needs will receive support. Those uncertainties matter to clinics, patients and providers preparing for changes to coverage.
Proposition 40 would impose a one-time 5% tax on the wealth of roughly 200 California residents worth at least $1 billion. The tax would apply to people who lived in California on Jan. 1, 2026, and would include many stock holdings, yachts and artworks. Real estate, pensions and retirement accounts would generally be exempt. The measure was placed on the ballot by Service Employees International Union-United Healthcare Workers West, which represents hospital workers.
The California Legislative Analyst’s Office estimates the measure could bring in “tens of billions of dollars.” Supporters say it could raise as much as $100 billion over five years. The proposal directs 90% of the revenue to a health care fund; the remaining 10% would be divided between food assistance and education, with lawmakers deciding how to allocate it.
What the money could cover
The union’s president, Dave Regan, says flexible funding would let lawmakers respond to a complex set of federal reductions whose effects are hard to predict in advance. The proposal’s supporters argue the money could help keep hospitals and emergency rooms open and maintain insurance for millions of Californians.
Potential uses include supporting people who lose Medicaid coverage under new federal work requirements, restoring coverage for some immigrants with legal status, and raising Medi-Cal payments to doctors. Low reimbursement rates can make providers less willing to take Medi-Cal patients. Lawmakers could also help people enrolled through Covered California, the state’s insurance marketplace, where premiums have risen after enhanced federal subsidies expired.
The need is substantial. A California Budget and Policy Center estimate puts expected losses to the state from the One Big Beautiful Bill Act at about $30 billion a year. The University of California, Berkeley Labor Center projects that federal and state cuts together could nearly double the number of uninsured Californians over the next four years, from about 2.4 million.
Still, a large funding estimate doesn’t guarantee that the proposed tax will prevent clinic closures, layoffs or people losing coverage. Chris Hoene, who leads the California Budget and Policy Center, said those outcomes can’t be assured. Health care economists and providers have also raised concerns about how broadly the measure describes the fund’s purpose. Glenn Melnick of the University of Southern California argues the language could allow lawmakers to use the money to replace existing health spending, rather than add to it.
One-time money, continuing needs
That distinction matters because the tax would provide a temporary pool of money while Medi-Cal and other programs have ongoing costs. René Bravo, a pediatrician in San Luis Obispo County and president of the California Medical Association, says a one-time infusion will eventually run out. He favors a more durable way to fund Medi-Cal.
The timing may also complicate the proposal’s usefulness. Even if the measure passes, the state would need months to collect the tax before the money became available. Billionaires could spread payments over five years, while some of the largest Medi-Cal eligibility reductions are expected to begin next year. That leaves providers facing near-term questions about patients’ coverage while the proposed funding is still being collected.
The proposal also comes with uncertainty about how much wealth would remain taxable. Pasadena resident Lynne Wines, a retired banker, supports finding money for health care but worries the tax could prompt wealthy residents to leave and encourage future taxes. Sergey Brin, Google’s co-founder, bought a home in Nevada and moved some businesses there late last year. He is funding advertising against Proposition 40 and has contributed more than $100 million to a nonprofit backing two competing proposals, according to campaign finance records.
One competing proposal would count certain new taxes toward California’s overall spending limit and require an auditor to review new tax proposals before they reach voters. Another would bar new taxes on personal property, intellectual property, retirement accounts and other assets. A Hoover Institution study estimated the billionaire tax could cost California $25 billion, partly by counting revenue lost if billionaires who have already left do not pay it. That estimate is contested, and claims about how much wealth might depart remain difficult to pin down.
Support is divided
Public views appear close. Two independent September surveys found support for Proposition 40 ranging from 45% to 52%. Pasadena resident Steve Erler, a 74-year-old building manager who works full-time because he can’t afford to retire, supports the proposal. He worries that funding cuts will harm children and older adults, and sees the tax as a way for very wealthy people to contribute to care and food assistance.
Support also crosses some party lines, while California’s Democratic leadership is divided. The California Democratic Party and Sen. Bernie Sanders support the measure. Gov. Gavin Newsom and Democratic gubernatorial nominee Xavier Becerra oppose it, while both have said very wealthy or high-earning people should pay more. Newsom has backed a federal wealth tax, but federal legislation has stalled.
If the measure passes, analysts say it could shape debate in other states about using taxes on wealth to help pay for essential services. Several states, including Hawai‘i, Maine, Massachusetts and Rhode Island, have adopted higher taxes on millionaire income; those taxes apply to income rather than total wealth. The central question for California is whether a one-time tax can provide timely, clearly protected help for health care needs that are likely to continue after the revenue is spent.
