California's billionaire wealth tax ballot initiative got enough signatures to qualify for the November election.
The ballot measure would levy a one-time tax of up to 5 percent tax on taxpayers and trusts with assets valued at more than $1 billion. California Secretary of State Shirley N. Weber announced that the initiative had surpassed the 962,106 signatures needed to appear on the ballot.
NBC News reported that critics, including California Gov. Gavin Newsom, have said the effort could drive out wealthy residents and investment out of the state.
The network reported that the measure still might not be placed on the ballot. Organizers have until June 25 to decide whether to go forward with it. The Service Employees International Union-United Healthcare Workers West, a large California healthcare workers union, led the ballot initiative.
The measure would allocate 90 percent of the tax revenue it generates for health care, while 10 percent would go toward food assistance or education-related programs. The measure "prohibits using revenues to replace existing funding for these purposes."
California's nonpartisan Legislative Analysis Office (LGO) wrote that it was difficult to gauge how much revenue such a tax would generate, given that it is based on net worth and not income.
"The state probably would collect tens of billions of dollars from the wealth tax. This temporary increase in state tax collections would be spread across several years beginning in 2027," the analysis states. "The exact amount the state would collect is very hard to predict for many reasons. For example, it is hard to know what actions billionaires would take to reduce the amount of tax they pay. Also, much of the wealth is based on stock prices, which are always changing."
The analysis acknowledged that some billionaires would likely leave the state, which could reduce the state's income tax revenue long-term.
"California billionaires, like all those earning money in the state, currently pay state taxes on their annual income. How billionaires respond to a new wealth tax could indirectly reduce their income tax payments," the LGO wrote. "For example, it is likely that some billionaires decide to leave California. The income taxes they currently pay to the state would go away with their departure."
Newsom has said that the initiative would end up costing California rather than helping the state.
In January, he told Politico: "The evidence is in. The impacts are very real — not just substantive economic impacts in terms of the revenue, but start-ups, the indirect impacts of ... people questioning long term-commitments, medium-term," Newsom said. "That's not what we need right now, at a time of so much uncertainty. Quite the contrary."
