The Journal. — California Billionaires Are Freaking Out Over a New Tax Proposal

Date: February 12, 2026
Hosts: Jessica Mendoza, Ryan Knutson
Guests: Laura Nelson (California reporter, WSJ), Suzanne Jimenez (SEIU-UHW union official), Gavin Newsom (CA Governor), quotes from tech and business elites

Episode Overview

This episode explores a controversial California proposal to impose a one-time 5% tax on assets held by billionaires, framed as an emergency response to a massive shortfall in the state's Medicaid budget. The story is driven by Laura Nelson’s reporting highlighting how the measure has galvanized fierce debates among the state’s ultra-wealthy, labor groups, and political leadership. The episode unpacks the proposal’s origins, mechanics, backlash from the tech elite, and the far-reaching consequences it could have on California's economic and social fabric.

Key Discussion Points & Insights

1. Genesis of the Billionaire Tax Proposal

• The idea for the tax came from a powerful healthcare workers union in California, aiming to patch an enormous funding gap in the state's Medicaid program (“Medi-Cal”), projected to lose $100 billion over five years due to recent federal cuts (04:15).
• Suzanne Jimenez (SEIU-UHW):

  "If we don't do anything right now, we are going to see our hospitals close, we are going to see ERs close. And so that's really what this billionaire tax is about." (04:33)

• The proposal targets California residents with a net worth over $1 billion, estimated at around 200 people statewide (06:08).
• It would be a one-time wealth tax (not income or capital gains), a radical departure from standard US and California tax policy.

2. How the Proposed Tax Works

• It would tax assets, not just liquid holdings:
  • Includes public and private stocks, real estate, artwork, intellectual property, voting rights, etc.
  • Applies to assets held as of January of the year the measure is passed (07:07).
• Valuation challenges:
  • Public assets (like traded stock) are straightforward to value.
  • Private holdings, art, “intangibles,” etc., present massive logistical and legal hurdles for fair, consistent valuation (07:47).

  "How do you value something that hasn't changed hands, that you just own? And that's all really untested territory.” — Laura Nelson (07:47)

3. Trigger for the Debate: Growing Economic Pressure

• Cost of living in California is among the highest in the US, and the wealth/personal hardship gap is stark:
  • California’s poverty rate, when adjusted for living costs, is tied for the highest in the country (05:40).
• Raising taxes on the middle class is politically toxic due to inflation and affordability crises (05:03).
• The union’s argument: billionaires “have the money” and can uniquely bear this public burden.

4. The Tech Elite & Billionaire Reaction

• The measure lit a fire under California’s hyper-wealthy and Silicon Valley elite.
• Private group chats like “Save California” (on Signal) became hubs for discussion and strategizing among tech moguls—across the political spectrum (10:21).
• Notable quotes from chat, showing range of reactions:
  • “Pro prosperity for all.” (10:55, chat participant)
  • Others undermined the tax as “communism” and “poorly defined.”
  • Warnings that “tech founders [would] pull up their companies and get out of the state.” (10:55)
• Some billionaires’ responses:
  • Jensen Huang (Nvidia CEO): “We choose to live in California. If California wants to do this, then like, California can do that.” (08:58)
  • Others very vocally opposed, hinting at or openly planning to leave the state.

5. Flight Risk: How Hard Is It to Leave California?

• Physically moving out doesn’t guarantee escape from the tax—CA uses 19 factors to assess residency, from property holdings to where your art and wine are stored, your club memberships, even your veterinarian (11:28).

  “To make the case that you no longer live here can be quite difficult.” — Laura Nelson (12:18)

• Some, like David Sachs (venture capitalist) and Larry Page (Google cofounder), have reportedly taken concrete steps to leave or reduce CA ties (12:38).

6. Wider Economic & Political Stakes

• California’s revenue is highly dependent on the ultra-wealthy:
  • Top 0.1% of earners contribute about 1/6 of all state tax revenue (13:04).
• State and business leaders fear an exodus could decimate the state budget long-term; even the specter of the tax is shifting behavior (13:04).
• Governor Gavin Newsom:
  • Publicly opposes the proposal, calling it “badly drafted,” and argues it doesn’t help the people or services it’s meant to (13:22, 13:47).

  "It's already had an outsized impact on the state." (13:22) "It does not support our public educators… teachers… firefighters… general fund." (13:33)

• Political action committee “Stop the Squeeze” formed to defeat the measure (13:47).

7. Uncertain Outcomes & Ongoing Debate

• Union leaders believe only a “very small number of people will leave or have left” (14:11).
• State analysts warn the fallout could be much larger, but “it’s all speculative… it’s going to take a number of years before we really know” (14:33).
• At its core, the episode argues this isn’t just about taxes:

  “What is the state’s relationship to its wealthiest residents? What do they owe the state and what does the state owe them?”
  — Laura Nelson (15:14)

• The debate taps broader societal tensions: fairness, contribution, resentment, and the future of the California dream.

Notable Quotes & Timestamps

• Laura Nelson (Reporter, WSJ):

  “It would impose a one time 5% tax on the assets of people who have net worths of more than a billion dollars.” (00:44)

• Suzanne Jimenez (Union):

  “We are really heading towards a health care crisis where we are going to see billions of dollars cut from our healthcare system.” (14:20)

• Gavin Newsom (Governor):

  “It's a badly drafted effort. It's already had an outsized impact on the state.” (13:22)

• Jessica Mendoza (Host):

  “The disparity in terms of the richest and the poorest residents of California is really stark. The poverty rate here... is tied for Louisiana for the highest in the country.” (05:40)

• Laura Nelson:

  “This measure is... pressing your thumb on the really soft, painful societal issues that don't have, like, good answers. And everybody is feeling, I think, a little bit bruised.” (15:14)

Timestamps for Key Segments

• 00:44: Introduction of the billionaire tax proposal
• 04:15: Explaining the Medicaid funding crisis
• 06:08: Details on tax’s scope and target population
• 07:40: Logistical & legal hurdles in assessing assets
• 10:21: Billionaires’ private Signal chat response
• 11:28: What it takes to “leave” California for tax purposes
• 12:38: Specific billionaires moving out
• 13:04: The state’s tax dependence on the top 0.1%
• 13:22–13:47: Governor Newsom’s public opposition
• 14:20: Union’s stance on the risk of people leaving
• 15:14: Deeper societal questions and the episode’s core theme

Episode Takeaways

This episode examines how a progressive but controversial tax proposal targeting billionaires’ assets is shaking the foundations of California’s social compact. It illustrates the high stakes and emotional charge surrounding questions of wealth, state responsibility, and fairness in one of the world’s richest and most unequal places. With deep reporting and a range of voices—from health care unions to tech tycoons—the story highlights the complex, high-drama negotiation between a state’s urgent needs and its economic giants’ willingness to stick around.