California ballot measure proposes 5% tax on billionaires

A proposed 5% wealth tax on billionaires qualified for the November ballot after collecting more than one million verified signatures, state officials said this week. Tax advisor David Lesperance told the New York Post that clients worth well under $1 billion have begun inquiring about leaving California.

He said callers asked whether the tax could become permanent and whether lawmakers might reduce the threshold.

Background on the proposal The measure is backed by SEIU-United Healthcare Workers West. Backers sent an open letter Thursday offering to cut the rate to 2%, but the compromise was rejected. UC Berkeley professor Emmanuel Saez said during a May 5 debate that the tax would not necessarily be limited to a single application.

enforcement Lesperance noted that the California Business Roundtable warned in an April memo the legislature could expand the tax to middle-class households. SEIU-United Healthcare Workers West responded that amendments cannot change the measure's fundamental purpose.

A mid-May Public Policy Institute of California survey found 54% of likely voters support the tax. Lesperance said some clients also cited federal proposals, including a 2% annual tax on households worth $50 million or more. Lesperance added that the Franchise Tax Board could interpret ownership stakes broadly.

He cited the example of an individual holding 60% voting shares in a company valued at $1.6 trillion, which could produce a tax bill of $48 billion. Nevada, Texas, and Florida are common relocation destinations, with Incline Village near Lake Tahoe already home to several high-net-worth residents.