California had $2 trillion of billionaire wealth just a few weeks ago. Now, 50% of that wealth has left – taking their income tax revenue, sales tax revenue, real estate tax revenue and all their staffs (and their salaries and income taxes) with them.

In other words, by starting this ill conceived attempt at an asset tax, the California budget deficit will explode. And we still don't know if the tax will even make the ballot. If the measures passes, it could be held up with lawsuit challenges.

California billionaires were reliable tax payers – 13.3% every year.

Unless this ballot initiative is pulled, we will not stop the billionaire exodus. With no rich people left in California, the middle class will have to foot the bill.

The "2026 Billionaire Tax Act" is a voter initiative backed by the Service Employees International Union–United Healthcare Workers West (SEIU-UHW) that aims to appear on California's November 2026 ballot, provided it gathers around 875,000 signatures. It would impose a one-time 5% excise tax on the net worth (including all forms of personal property and wealth, tangible or intangible) of applicable individuals and trusts exceeding $1 billion.

Key details

It targets California residents (full- or part-year) as of January 1, 2026, with retroactive effect if passed. The January 1, 2025, backdating language was dropped to try and get something defensible and passable. There will be legal challenges.

Key Potential Lawsuits and Challenges
– Retroactivity and Due Process Violations (U.S. and California Constitutions)
The Act's tax obligation is tied to residency on January 1, 2026—nearly 11 months before potential voter approval in November 2026. Challengers argue this creates a "harsh and oppressive" retroactive tax, violating the Due Process Clause (5th and 14th Amendments). Precedents like Carlton allow modest retroactivity for rational purposes

– Dormant Commerce Clause Violations
The tax applies to worldwide assets, potentially taxing wealth generated outside California without fair apportionment. Under the Complete Auto test, taxes must have substantial nexus, be fairly apportioned, non-discriminatory, and related to state services. Challengers (via attorney Alex Spiro's letter to Gov. Newsom) claim it fails apportionment and burdens interstate commerce, especially for nonresidents or those with global holdings.

– Takings Clause and Equal Protection Violations (5th and 14th Amendments)

Critics like Spiro label it an "uncompensated confiscation of property" (Takings Clause) and discriminatory, concentrating burden on a tiny group (~200-250 billionaires) to solve general revenue issues, violating equal protection (citing Armour v. City of Indianapolis, 2012).