One of the most controversial propositions on California’s ballot would directly tax just a few hundred people, but could impact millions more.
Supporters say Prop 40, known as the Billionaire Tax Act, would help protect healthcare and other public services from federal funding cuts. Opponents argue the measure is written in a way that would do more harm than good.
The measure would impose a one-time, 5% tax on roughly 200 California billionaires. The union behind the measure, SEIU United Healthcare Workers West, projects it would raise $100 billion over five years with 90% going to healthcare. The other 10% would go to food assistance and education.
Cheryl Okuboye, a licensed psychiatric technician with Sharp Mesa Vista Hospital for 26 years, is backing the proposition placed on the ballot by her union.
“I got into this because I want to make a difference in patients’ lives and I think I continue to do that daily,” Okuboye said.
Okuboye said the Trump administration’s so-called Big Beautiful Bill has hurt her industry, and she’s worried it’ll only get worse.
The California Budget and Policy Center estimates federal Medicaid cuts could leave up to 3.4 million Californians without coverage while costing the state $30 billion a year.
“You’re talking about premiums going up. We’re talking about deductibles going up, and we’re already seeing it,” Okuboye said. “This is gonna fill our ERs with so many patients, we’re not going to be able to provide the proper care that we need to.”
When asked what she sees as the future of healthcare if something like Proposition 40 isn’t signed into law, Okuboye said, “I think the outcome is going to be devastation.”
But opponents say it’s not as simple as it sounds.
“If (the billionaires) leave because they don’t want to deal with this, because they don’t want to pay 5% of their net worth, then you’re not only losing the revenue from this, right, from Prop 40, you’re also losing the income tax revenue that they would have ordinarily generated just by living here,” said Mark Kersey, president and CEO of the San Diego County Taxpayers Association.
Proposition 40 says the tax would hit billionaires who were residents of California on Jan. 1, 2026. So even if they leave now and it passes they would still have to pay.
But many tax experts question if a retroactive tax is even constitutional or whether a one-time tax is the answer to an ongoing funding problem.
Kersey also points to language he believes could allow lawmakers to expand who this tax hits and how often it could be imposed in the future with a two-thirds vote.
The bill states “the Legislature may amend the 2026 Billionaire Tax Act, by statute passed in each house of the Legislature by rollcall vote entered in the journal, two-thirds of the membership concurring, if the statute is consistent with and furthers the purposes of the 2026 Billionaire Tax Act.”
That’s why Kersey says the best way to counter the cuts isn’t through Prop 40, but through the votes people make on the rest of their ballot and the people they help put in office.
“Just because things look a certain way today does not necessarily mean that’s what they’re going to look like a couple of months from now,” Kersey said.
Other major organizations that would seemingly stand to benefit from the tax have also voiced their opposition, like the California Teachers Association and the California Medical Society.
Among CMA’s concerns, according to its website:
More Budget Instability, Not Less: California already relies heavily on a volatile revenue system tied to economic cycles and capital gains income. This initiative makes our health care system more dependent on an already unpredictable system. In fact, this measure may result in less funding for our general fund and therefore less funding for health care. Not a Long-Term Solution: Even supporters acknowledge the proposal is intended as a one-time response to a budget challenge. California’s health care system cannot be built on temporary revenue spikes or uncertain funding streams. Patients, providers, and health care programs need reliable, sustainable funding, not a short-term fiscal fix that could ultimately reduce overall state revenues and make future budget shortfalls more severe. Will Reduce Funding: During economic downturns, revenues decline sharply, creating significant budget challenges. No Health Care Input: Health care stakeholders were not involved in developing the proposal. If the goal of this initiative were genuinely to solve Medi-Cal funding challenges, California’s physicians, providers, hospitals, clinics, and other health care stakeholders would have been included in developing the proposal. Lacks Oversight and Accountability: This measure has no safeguards to ensure the revenue generated is directed toward patient care. There is no meaningful oversight or accountability structure to guarantee that promised funds reach Medi-Cal patients, providers, clinics, or communities in need. Voter Confusion: If this measure is on the ballot, it will make it more difficult to pass the extension of California’s existing tax on high income earners that has become critical funding to balance the state budget. Supporters are Undermining Healthcare System: The organization backing this proposal is advancing other ballot measures that will push physicians and health care providers out of state and that would close clinics and reduce access to care for patients across California. Alternate Revenue Sources: CMA is committed to identify long-term, reliable funding solutions for Medi-Cal and the broader health care system. If this one-time tax measure qualifies for the ballot, it could make it more difficult to pass a separate proposal to extend California’s existing tax on high-income earners (Prop 55, passed in 2016), which has become a critical source of state funding for education and health care programs.
Also of note while the California Democratic Party endorsed a YES vote on Prop 40, saying it “makes billionaires pay their fair share to save healthcare,” Gov. Gavin Newsom is against it, despite being in favor of a national wealth tax.
For Okuboye, doing nothing is the bigger risk.
“Why are we trying to protect the billionaires? We need to protect the 39 million people in this state. Everybody needs healthcare. So that’s why I’m out here fighting,” Okuboye said.
Even if voters approve Proposition 40, there’s a chance it never takes effect. That’s because Propositions 41 and 42 could override it if they also pass and receive more yes votes.
Ultimately, the fate of the billionaire tax could depend on how Californians vote on all three measures.
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