The measure, backed by SEIU-United Healthcare Workers West, would impose a 5% tax on the personal wealth of California’s estimated 200 billionaires. Supporters say the money would help protect health care access while also providing funding for public education and food assistance programs.

But the proposal has drawn sharp opposition from some of the state’s wealthiest residents, business interests, Gov. Gavin Newsom and even some labor groups. The dispute has renewed a long-running debate in California politics: who should pay for public services, and how much?

California’s initiative system was created in the early 20th century as part of a reform movement led by figures such as Gov. Hiram Johnson, who argued that voters needed a way to bypass a Legislature heavily influenced by powerful interests. More than a century later, ballot measures have become expensive political battles, often funded by groups with major financial stakes in the outcome.

Recent elections have shown how costly those fights can become. In 2022, casino-owning tribal governments and online gambling companies spent roughly half a billion dollars on competing sports betting measures. Voters rejected both, but the campaign underscored the enormous sums that can be spent when billions of dollars in future revenue are at stake.

The billionaire tax proposal is part of a broader set of tax-related measures expected to shape the next statewide ballot. Public employee unions and other advocates for expanded services are pushing for additional revenue, while opponents argue California already depends too heavily on high earners and businesses to fund state government.

Under the SEIU-UHW proposal, 90% of the money raised from the billionaire wealth tax would go toward health care. Smaller portions would support public education from kindergarten through community college and food assistance programs. The measure’s backers have estimated the tax could generate tens of billions of dollars, potentially as much as $100 billion.

That allocation has caused friction even among groups that often support tax increases. Some unions have objected to the plan because health care would receive the overwhelming majority of the proceeds, leaving comparatively modest shares for schools and anti-hunger programs.

Newsom has emerged as the most prominent opponent of the proposal and has been pressing SEIU-UHW leaders to withdraw it before the ballot is finalized. The deadline to remove measures from the November ballot is approaching quickly.

Opponents argue the measure could damage the state’s budget by prompting wealthy Californians to leave. California relies heavily on income taxes paid by high earners, making state revenue especially sensitive to the financial decisions of a small number of residents. Critics say a tax on wealth, even if described as a one-time levy, could convince billionaires and other wealthy households that California is becoming too unpredictable.

Some wealthy Californians have already left the state, citing the potential tax as a factor, while others may have quietly changed their residency. Opponents have also formed campaign committees and pursued countermeasures intended to blunt or undercut the tax if it reaches voters.

A central issue in the dispute is whether the proposal would truly be limited to a one-time tax. The measure states that lawmakers could amend the tax if changes are consistent with and advance the purposes of the Billionaire Tax Act. Those stated purposes include protecting access to high-quality and equitable health care and supporting funding for education and food assistance by raising revenue from billionaire wealth.

Critics contend that language could give the Legislature room to extend the tax or broaden it to people with lower levels of wealth, depending on how courts interpret the measure. Supporters frame the proposal as a targeted way to raise money from the very richest Californians for essential public needs.

California’s political history gives opponents another argument. In 2012, voters approved what was described as a temporary income tax increase on the state’s wealthiest residents. Four years later, unions and other supporters backed a successful measure extending that tax through 2030. A new proposal this year seeks to make it permanent.

That history has become part of the case against the billionaire tax. Once a revenue source is created, opponents say, groups that benefit from the funding have strong incentives to keep it going.

For voters in Southern California and the Inland Empire, the debate could have practical consequences. State funding for health care, schools, community colleges and food assistance affects counties such as Riverside and San Bernardino, where demand for public services remains high. At the same time, the statewide budget depends heavily on revenue from high-income taxpayers, making any shift in where wealthy residents live or pay taxes a matter of concern for local governments and service providers.

Whether the billionaire tax actually appears on the November ballot now depends on the final days before the deadline. If it remains, California voters will be asked to decide another high-stakes tax question — one likely to draw major spending from both supporters and opponents.

Original source: CalMatters

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Taxing the rich to backfill Trump-induced federal funding cuts might sound like a no-brainer policy for the party’s left flank, which counts wealth inequality among its top issues. 

But despite a strong show of support from prominent national figures, including Sen. Bernie Sanders of Vermont and liberal economist Robert Reich, the “2026 California Billionaire Tax Act” has become a hot potato for labor leaders.

The proposed initiative would levy a one-time tax of 5% on any resident of California whose net worth exceeds $1 billion, which applies to around 200 people, according to Forbes. That money would plug an estimated $100 billion hole left by federal cuts to Medi-Cal and other social service programs.

Publicly, prominent labor and progressive players have largely kept quiet, unlike Gov. Gavin Newsom who has aired his disdain loud and clear. Yet in private, some union leaders and their allies in the Legislature rail against the measure. Of the critics who spoke with CalMatters for this story — three union leaders and five members of the Legislative Progressive Caucus — only one lawmaker would criticize the measure openly. 

Critics question its feasibility and whether the state even knows how to accurately appraise a billionaire’s total wealth, a crucial step to evaluating how much tax they would owe. They fear long-term revenue loss by driving wealthy people out of California. And some resent that the union sponsoring the initiative, SEIU-United Healthcare Workers West, designed the measure to predominantly benefit its members rather than boost the state’s general fund, where it could go to all budget needs. 

“It’s not that taxing billionaires in itself is wrong,” said Keely Martin Bosler, formerly the top state budget officer to Newsom and former Gov. Jerry Brown. She is now a Democratic consultant who has advised several of California’s most powerful labor groups, including the Service Employees International Union of California, the parent union of SEIU-UHW. “The way in which this tax specifically is constructed is problematic.”

Many progressive state lawmakers and Capitol heavyweights, such as Sen. Scott Wiener of San Francisco and the powerful California Labor Federation, have sidestepped the question of whether they’d support it, declining for now to take a position on an initiative that has yet to officially qualify for the ballot. 

“The Labor Federation won’t take it up for an endorsement until July,” said Lorena Gonzalez, the organization’s president, in a text message.

Yet if the tax lands on the November ballot, as it appears on track to do, progressive critics will be saddled with the tricky optics of opposing — or at least not supporting — a measure that embodies one of their base’s core tenets: taxing the rich.

Even the mere threat the measure could qualify for the ballot has already spurred a torrent of opposition spending — more than $50 million in total so far — from billionaires such as Google co-founder Sergey Brin and cryptocurrency mogul Chris Larsen. Brin’s group, known as “Building a Better California,” has also spawned three new competing ballot measures designed to undermine the billionaires’ tax. 

Critics fear that if billionaires like Brin become even bigger perennial spenders in California politics, they could neuter the progressive agenda by bankrolling more business-friendly candidates and ousting left-leaning, labor-aligned legislators. 

But the measure’s proponents say they are undeterred by the secretive detractors and challenge their critics to put their names behind their words.

“What we have is a group of so-called leaders who are not reflecting the attitudes of their own constituents,” said Dave Regan, president of SEIU-UHW and the de facto leader of the billionaire tax measure. “That’s why they want to be anonymous.”

Regan said he’s confident the initiative will amass enough signatures to qualify for the ballot before the end of April. Then, he said, “We believe a lot of those people are going to come around and change because this makes sense, because the public is supportive, because their own members are supportive.”

The case for, and against, the billionaires’ tax

So far, polling has shown the billionaire tax is relatively popular with voters. Recent surveys show just over half of Californians surveyed said they’re inclined to vote for it. 

Critics point out that California’s existing state tax structure is entirely based on income, rather than net worth. The state would have to appraise each person’s assets, including real estate, art, automobiles and private and public businesses. The billionaires could pay in installments, handing over 1% of their wealth annually for five years.

Bosler said that with income tax filings, the Franchise Tax Board can use data from federal tax returns to verify its own analysis. Since there’s no federal wealth tax, California would be forging uncharted territory with no tax compliance support from any other source or agency — a risky move that could invite legal challenges. 

“The state is not a miracle worker, like, they’re not going to suddenly be able to do all of this like perfectly,” said Bosler. “I mean they will do their best, but I just think this is expertise that they have built up over 50-plus years. Like, none of this is in their wheelhouse at this point.”

But champions of the tax argue it is the only real solution on the table so far to save hospitals, health care jobs and, ultimately, patient lives they say are at risk due to federal funding cuts to Medi-Cal and food assistance programs. 

Supporters note that the tax is not intended to solve California’s structural budget problems. 

“It’s one-time funding to fill what we hope is a one-time hole,” said Brian Galle, a tax law professor at UC Berkeley who helped craft the measure. Galle said only around 200 people would be subjected to the tax, so the extra burden on the Franchise Tax Board wouldn’t be too great. 

“It’s not like FTB is going to get a blizzard of tens of thousands of new returns that they’re going to have to figure out a whole new data system for cracking,” said Galle.

Why some progressives aren’t on board

Those who have qualms with the initiative have largely kept their criticisms private. 

One liberal state legislator, who spoke on the condition of anonymity, said the infighting among the unions puts progressive lawmakers in a difficult position. While he empathizes with the urgency that health care workers feel, he and other Democrats are not convinced the policy could withstand legal challenges and worry about the wealthy employing savvy accounting maneuvers to skirt the tax altogether.

Some organizations that are synonymous with progressive politics in California, such as the Working Families Party, also haven’t taken a position, even as other unions such as the Teamsters and AFSCME California support it. 

Even the powerhouse labor union SEIU California is choosing not to take a position on the measure, which is spearheaded by one of its local affiliates, SEIU-United Healthcare Workers West. 

Assemblymember Chris Ward, a member of the progressive caucus, called the measure a “well-meaning effort by UHW,” but criticized the proposal for being just a one-time tax primarily benefiting the health care sector rather than boosting the state’s overall revenues. Regan said SEIU-UHW made the tax one-time to nullify the argument that it would push billionaires out of the state.

Ward noted that he and his colleagues are considering “superior” bills, such as one that would close a corporate tax loop to generate $3 billion per year, and another that would create a new tax on corporations that pay workers so little that they qualify for Medi-Cal and nutrition assistance.

Regan argued these measures would only make California more unaffordable, since businesses would pass their increased costs along to consumers. 

Ward, the sole state lawmaker who would candidly share his concerns about the initiative with CalMatters, said he and his colleagues have heard pushback from “a number of other labor organizations that don’t support that initiative,” primarily because its members would not directly benefit from any of the revenue. Uniting labor, he said, is the key to any successful revenue solution.

“There’s a need to look at a wealth tax for a more broad range, including health care workers but other purposes that are state priorities,” Ward said, “and that will be left off of the table if this is the only question we’re seeing.”

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To help pay for his big economic and social agenda, President Joe Biden is looking to go where the big money is: billionaires.

Biden never endorsed an outright “wealth tax” when campaigning last year. But his more conventional proposed rate hikes on the income of large corporations and the wealthiest Americans have hit a roadblock.

That leaves a special tax on the assets, not the income, of billionaires being proposed by a Senate Democrat as a possible vehicle to help pay for child care, universal pre-kindergarten, child tax credits, family leave and environmental initiatives.

Biden has vowed that his programs will not add a penny to the deficit, which means selling to Congress and voters a tax on the wealthiest .0005% of Americans. Some details on the proposed billionaires tax:

HOW WOULD IT WORK?

Essentially, billionaires earn the bulk of their money off their wealth. This might be from the stock market. It could include, once sold, beachfront mansions or the ownership of rare art and antiquities. A triceratops skeleton.

This new tax would apply solely to people with at least $1 billion in assets or $100 million in income for three straight years. These standards mean that just 700 taxpayers would face the additional tax on increases to their wealth, according to a description obtained by The Associated Press of the proposal of Senate Finance Committee Chairman Ron Wyden of Oregon.

On tradeable items such as stocks, billionaires would still pay a tax even if they held on to the asset. They would be taxed on any increases in value and take deductions on losses. Under current law, those assets get taxed only when they’re sold.

Billionaires would also face an additional tax on non-tradeable assets such as real estate and business interests once those assets are sold. During the first year of the proposed tax, the billionaires would also owe taxes on any built-in gains that predate the tax.

HOW MUCH MONEY WOULD IT RAISE?

House Speaker Nancy Pelosi estimated Sunday on CNN that the tax would raise $200 billion to $250 billion. This is a meaningful sum, but it’s well shy of the nearly $2 trillion in proposed additional spending over 10 years being negotiated right now. This means that additional levies such as the global minimum tax and increased enforcement dollars for the IRS would still be needed to help close the gap.

And the forecasts for revenue from the wealth tax are highly debatable.

“It’s just impossible to implement,” said Allison Schrager, a senior fellow at the conservative Manhattan Institute. “There’s a lot of evidence that these things don’t work, and I’ve never heard an explanation of how this could be workable.”

WHY WOULD BIDEN GO THIS ROUTE?

The president would rather raise corporate tax rates and rates on wealthy individuals. That was his initial proposal, but he’s got to appease West Virginia Sen. Joe Manchin and Arizona Sen. Kyrsten Sinema. Those are the two make-or-break Democratic votes in the evenly split Senate.

Sinema objected to higher rates, which brought the wealth tax into play as an alternative.

The idea gained steam after the publication of French economist Thomas Piketty’s book “Capital in the Twenty-First Century.” Massachusetts Sen. Elizabeth Warren made a 2% wealth tax a trademark policy in the 2020 Democratic presidential primaries, and fellow candidate Bernie Sanders, the senator from Vermont, proposed his own wealth tax.

Biden never jumped on that bandwagon. But he did make higher taxes on the wealthy a key promise, saying no one earning less than $400,000 would pay more.

ARE BILLIONAIRES REALLY THAT RICH?

Seems that way.

There is a legitimate debate about the optimal forms of taxation. Is it better for the economy for the wealthy to keep their assets invested in new businesses? Or, is it better for some of their money to go to the government to help fund programs like child care, universal pre-K and shifts to renewable energy?

What is clear is that the wealthy do have money to tax, should the government wish to do it.

America’s billionaires have seen their collected wealth surge 70% since the start of the pandemic to over $5 trillion, according to an analysis by the pro-wealth-tax Americans for Tax Fairness and the Institute for Policy Studies Program on Inequality. That gain from March 18, 2020, to this past month is equal in size to Biden’s spending plans over 10 years.

“Right now, billionaires are not paying a dime in taxes on their fabulous income gains from their stock holdings during the pandemic,” said Frank Clemente, executive director of Americans for Tax Fairness. “The billionaires income tax would tax the increase in the value of those assets each year just like workers’ wages are taxed.”

There were 614 U.S. billionaires at the start of the pandemic, a total that has now grown to 745.

Part of what makes the coronavirus unique is that many poorer Americans also became wealthier, but they did so at a much slower pace than billionaires.

Federal Reserve data indicate that the net worth of the bottom 90% of Americans — a group that includes the middle class — rose by roughly 22%. For many Americans, the wealth increase reflected a rising stock market, higher home values and unprecedented government aid in the form of direct checks and forgivable payroll loans to small businesses.

CAN BILLIONAIRES ESCAPE TAXATION?

They’ve found ways before.

They can hire armadas of lawyers, accountants and others to minimize their tax burdens. The news outlet ProPublica revealed various tax shelters with IRS data earlier this year, and the recent Pandora Papers showed there is a global industry to shelter the assets of the politically powerful and extremely wealthy.

The ProPublica investigation showed that Warren Buffett paid an average rate of 19%. Amazon founder Jeff Bezos paid 23%, while Tesla’s Elon Musk was at roughly 30%. The top tax rate on income earned from labor is 37%, but the tax on capital gains is a lower 20% and that favors those with extreme wealth. The lower capital gains rate can also encourage more investment in new companies that help the economy grow.

A White House analysis in September indicated the country’s 400 wealthiest families paid an average federal income tax rate of 8.2% between 2010 and 2018. The administration’s fundamental message is that a rate this low is unfair because middle class families often pay a greater share of their income in taxes.

The bottom-line question for Democratic lawmakers is how to close or at least narrow the escape hatches for those with extreme wealth. It could require calculations such as the “deferral recapture amount” and other technicalities that are likely to baffle most of America. But the writing of the tax law and its enforcement will determine just how successful a wealth tax would be — and perhaps the fate of Biden’s big agenda as well.

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UNITED NATIONS (AP) — Secretary-General Antonio Guterres declared Monday that the world’s failure to unite on tackling COVID-19 created wide inequalities, and he called for urgent action including a wealth tax to help finance the global recovery from the coronavirus.

The U.N. chief said latest reports indicate that “there has been a $5 trillion surge in the wealth of the world’s richest in the past year” of the pandemic. He urged governments “to consider a solidarity or wealth tax on those who have profited during the pandemic, to reduce extreme inequalities.”

Guterres’ call followed an appeal in October by U.N. World Food Program Executive Director David Beasley to the more than 2,000 billionaires in the world, with a combined net worth of $8 trillion, to open their bank accounts. He warned in November that 2021 would be worse than 2020, and without billions of dollars “we are going to have famines of biblical proportions in 2021.”

Guterres told the U.N. Economic and Social Council’s Forum on Financing for Development that since the pandemic began “no element of our multilateral response has gone as it should.”

He pointed to more than 3 million deaths, increasing coronavirus infections, the worst recession in 90 years, some 120 million people falling back into extreme poverty, and the equivalent of 255 million full-time jobs lost.

“Advancing an equitable global response and recovery from the pandemic is putting multilateralism to the test,” he said. “So far, it is a test we have failed.”

“The vaccination effort is just one example,” Guterres said, stressing that just 10 countries account for around 75% of global vaccinations and many countries haven’t even started vaccinating their health care workers and most vulnerable citizens.

“Some estimates put the global cost of unequal access and vaccine hoarding at more than $9 trillion,” he said.

The lack of global solidarity also means that while some countries have mobilized trillions of dollars for COVID-19 relief for their citizens, “many developing countries face insurmountable debt burdens” and face an impossible choice of servicing debt or saving lives, the secretary-general said.

Guterres called for urgent action to make vaccines available to everyone, everywhere; to not only help developing countries but middle-income countries in distress. He said debt payments should be suspended beyond the end of the year into 2022 and the international community needs to tackle the roots of the global debt crisis. He said there also must be investment “in education, decent and green jobs, social protection and health systems.”

While the pandemic remains the immediate challenge, climate change can’t be ignored, Guterres said.

He again urged countries to deliver on the $100 billion annual commitment made a decade ago to help developing countries reduce their emissions and cope with the inevitable impacts of global warming, such as sea level rise and droughts.

Pakistani Prime Minister Imran Khan opened the forum urging mobilization of money for developing countries “to recover from the COVID-inducted recession” and put them on the path to achieve U.N. development goals for 2030 including eliminating extreme poverty.

He warned that if vaccines are not made available to people everywhere as soon as possible “the virus will roam around and come back.”

“Production of the vaccine must be ramped up,” Khan said. “Patent and technology-transfer restrictions should be waived to enable this.”

Malawi President Lazarus McCarthy, chair of the group of 46 least developed countries, called for access to vaccines and adequate funding for the World Health Organization’s COVAX facility to buy and deliver vaccines to developing nations. WHO says COVAX needs $5 billion in 2021.

McCarthy told the forum the least developed countries, known as LDCs, also want to ensure “that COVID-19 vaccines go beyond the current provision of 20 percent” for the entire population under COVAX.

He also called for “full debt cancellation of all bilateral, multilateral and commercial debts owed by LDCs and a debt standstill with immediate effect” and stepped up development aid including financing to bring the world’s poorest nations into the digital world.

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