A proposed ballot initiative in California seeks to impose a one-time 5% tax on the assets of residents with a net worth exceeding $1 billion. This measure, which aims to generate approximately $90 billion in revenue to offset reductions in Medicaid funding due to recent federal budget cuts, has garnered support from groups such as the Service Employees International Union–United Healthcare Workers West. Advocates are currently gathering signatures to place the measure on the ballot for the 2026 election.

However, the proposal has faced substantial backlash from influential figures in Silicon Valley. Notable tech leaders, including venture capitalist Peter Thiel and Google co-founder Larry Page, have expressed intentions to reconsider their ties to California if the tax is enacted. Thiel, who has a net worth of approximately $27.5 billion, could face a tax liability exceeding $1.2 billion under the proposed law. Critics argue that the tax could compel entrepreneurs to liquidate significant portions of their companies to meet tax obligations, with Palmer Luckey, co-founder of defense technology firm Anduril Industries, labeling the initiative as a product of "fraud, waste, and political favors."

If approved by voters, the tax would be retroactive to January 1, 2026, meaning a resident with $20 billion in assets would owe $1 billion, payable over five years. Bill Ackman, another billionaire investor, has warned that the measure could lead to severe economic consequences for California, suggesting it may drive away productive entrepreneurs and ultimately diminish tax revenues.

California Governor Gavin Newsom has publicly opposed the billionaire tax, acknowledging the broader issues of wealth inequality that the proposal highlights. He emphasized the need for a balanced discussion regarding the implications of such measures on the state's economy and social fabric. U.S. Representative Ro Khanna (D-CA), a supporter of the tax, has engaged in disputes with industry leaders over taxation and labor rights, arguing that addressing wealth concentration is essential for fostering a thriving democracy and ensuring equitable access to essential services like healthcare and education. Despite facing criticism from former donors who claim his stance alienates moderate constituents, Khanna maintains that such measures are necessary to address the economic challenges faced by many Americans.