Should California pass a billionaire tax? Our Proposition 40 endorsement | Opinion

Voters should approve Proposition 40, the one-time tax on billionaire wealth. Though it was not unanimous, a majority of our editorial board endorses Prop. 40 because we believe its passage could create funding to offset a historic elimination of federal support for Medi-Cal and other safety-net programs.

Read more Newsom — again — vetoes bill allowing undocumented students to work on campus

According to the California Budget & Policy Center, President Donald Trump’s federal budget bill, known as H.R. 1, includes the largest cuts to health care and food assistance in U.S. history. They estimate that Medi-Cal cuts alone could cost California tens of billions of dollars and cause about 1.3 million Californians to lose healthcare access by 2030.

When patients lose insurance, hospitals and clinics lose the Medicaid payments while absorbing more uncompensated care. KFF and the Commonwealth Fund have warned that the federal cuts could lead rural hospitals, community health centers and safety-net medical centers to shed workers and eliminate services.

These institutions, which disproportionately serve low-income and rural patients, stand to lose billions of dollars in revenue, the two foundations said.

Prop. 40 would impose a one-time, 5% tax on the wealth of Californians worth more than $1 billion. While 10% would go to education, food assistance and tax administration, 90% of the funds would be reserved for healthcare.

A first-of-its-kind state tax, Prop. 40 cannot permanently solve the healthcare funding crisis in Washington. But it would give legislators considerable discretion over how to spend money to care for the health of vulnerable Californians. Prop. 40 proponents predict it will raise about $100 billion.

The nonpartisan Legislative Analyst’s Office said California would probably only collect tens of billions of dollars. Meanwhile, Stanford economist Joshua Rauh and other Hoover Institution researchers estimate the tax would collect about $40 billion, but claim it would ultimately cost California $25 billion, because they believe billionaires will leave the state — taking their future income and capital gains tax payments with them.

It’s true that California already depends dangerously on these volatile revenues from its wealthiest residents.

But the LAO projects that behavioral changes, including the possibility of billionaires leaving California to avoid the tax, would probably reduce future state revenues by less than $1 billion annually.

No one really knows, but a majority of our editorial board believes it would be dangerous to wait for the perfect solution to catastrophic cuts to social services. Prop. 40 has a realistic chance of passage because it responds to an extraordinary set of circumstances.

Washington approved tax reductions that disproportionately benefit the wealthiest Americans while enacting a federal legislation that will cut nearly $1 trillion from Medicaid over ten years.

We agree that Washington should fix Medicaid funding, and we agree Sacramento should develop a better tax system. But neither government has done so, and no opponent who met with our editorial board presented a funded alternative to Prop. 40.

Californians who depend on Medi-Cal should not have to lose coverage, and clinics and hospitals should not have to face a crisis before politicians decide the problem is sufficiently urgent.

Read more Man convicted of series of sexual assaults targeting college-aged women in Sacramento

Some of California’s wealthiest residents have spent extraordinary sums to defeat Proposition 40 and advance competing measures, Propositions 41 and 42, that could nullify it. Google co-founder Sergey Brin has contributed more than $100 million to the effort. If Proposition 40 and either competing measure pass in November, the measure with conflicting provisions that receives the most “yes” votes will prevail under the California Constitution.

Billionaires have every right to fight a tax that could cost them billions. But voters should recognize the enormous political power that such wealth can buy and ask why so much of that power has been exercised through campaign committees rather than direct public engagement.

Prop. 40 will almost certainly face litigation, particularly over its provision applying the tax to billionaires who were California residents on Jan. 1, 2026, months before voters decide the measure. Courts have upheld many tax laws with retroactive provisions, but no one can guarantee this one will survive.

Proponents told our board that they anticipated litigation and wrote an accelerated judicial review process into the initiative. California’s initiative history gives voters reason for skepticism about grand promises attached to dedicated pots of money. That’s why the Legislature must not squander this opportunity.

Every Prop. 40 dollar should be publicly traceable. California should create an online dashboard showing how much has been collected, where it has gone, which providers and programs received it, and whether the spending actually preserved coverage, access and health outcomes. Lawmakers should use the breathing room Prop. 40 could provide to devise the permanent solution it cannot deliver.

This ballot initiative does not need to solve California’s health care crisis to be worthwhile. It simply needs to keep a federal retreat from becoming a California catastrophe. Billionaires can afford to contribute, and California cannot afford to wait.

Vote yes on Proposition 40.