New California Tax Could Raise $100 Billion For Health Care

A coalition led by a major California union is pushing a new ballot initiative that would impose a one-time 5 percent tax on the state’s billionaires, aimed at filling a projected shortfall in federal Medicaid and education funding. The effort, spearheaded by the Service Employees International Union (SEIU), seeks to address the financial fallout from a new law signed by President Donald Trump that slashes federal health and food aid. Why It Matters The measure comes in response to recent legislation signed by Trump, which will reduce federal spending on Medicaid and food assistance by over $1 trillion over the next ten years. According to the California Budget and Policy Center, these cuts could cost California $30 billion in annual Medicaid funding and potentially cause up to 3.4 million residents to lose health coverage. FILE – Pediatrician Irving Phillips, left, examines a boy at a CommuniCARE+OLE clinic, June 26, 2025, in Davis, Calif. (AP Photo/Godofredo A. Vásquez) What To Know The proposed tax would apply to the net worth of California’s wealthiest residents in the 2026 tax year, generating an estimated $100 billion in revenue. The funds would be directed primarily to maintain Medi-Cal coverage for low-income residents and to support public education, which is also facing federal grant reductions. Proponents, including SEIU and other advocacy groups, hope the initiative will appear on the statewide ballot in November 2026. For this to happen, backers must gather more than 870,000 signatures by spring of next year, following approval from state Attorney General Rob Bonta to begin the petition process. A small portion of the funds would also be directed toward K-12 education, with advocates citing threats from the federal government to withhold grant money from public schools. Supporters estimate the tax could generate approximately $100 billion in revenue, which could begin being appropriated in 2027. The initiative states it is “designed to make the State tax system more equitable.” Despite these ambitions, passage remains uncertain. California Governor Gavin Newsom, a Democrat, has historically opposed tax increases specifically targeting the wealthy. He has also publicly warned about the impact of federal funding cuts on California families. He said, “California has led the nation in expanding access to affordable health care, but Donald Trump is ripping it away.” What People Are Saying Leaders and supporters of the measure cite the urgency of preserving health care access in California due to the scope of federal cuts: Dave Regan, president of SEIU-United Healthcare Workers West, said: “If we do not do this, millions of people are going to lose health care, an untold number of people will go without treatment and there will be tragedy after tragedy.” Emmanuel Saez, professor of economics at the University of California, Berkeley, emphasized the role of billionaires in the state’s future: “We hope that some and perhaps hopefully a large number of billionaires will recognize that it’s important in the state where they’ve grown their fortune that they have a responsibility to society to preserve the future of California.” What Happens Next With the measure now formally submitted to Bonta, proponents will await authorization to begin gathering the required signatures. If approved, the campaign faces the challenge of securing enough support to qualify for the ballot and then persuading voters in the face of anticipated opposition from wealth advocacy groups and a governor with a record of resisting tax hikes for the wealthy. Billionaires subject to the tax would see their assessments apply for tax year 2026, with funds available for appropriation in 2027. The broader policy debate over tax equity, health funding, and the fallout from federal budget changes is expected to sharpen as the measure moves forward. This article contains reporting from The Associated Press.