California Billionaires Are Freaking Out Over a New Tax Proposal

Summary

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

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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.

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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.

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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)

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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.

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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.

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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).

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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).

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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.

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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)

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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

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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.

Transcript

[Jessica Mendoza]

Our colleague Laura Nelson covers all things California. And late last year, she came across something that could revolutionize the way money flows through the state. A proposal to tax billionaires.

[Laura Nelson]

So I spotted this billionaire tax proposal the day that it was sent to state officials. It was actually my fourth day at the Journal. I just started working here and I flagged it to my editors, like, hey.

[Jessica Mendoza]

Wait to get you hit the ground running.

[Laura Nelson]

Yeah. Thank you to these people for giving me something interesting to do in my first couple of months on the job.

[Jessica Mendoza]

California is known for its high taxes, but this one was different.

[Laura Nelson]

It would impose a one time 5% tax on the assets of people who have net worths of more than a billion dollars.

[Jessica Mendoza]

At first, Laura thought, this is interesting, but it might not get very far. Taxing the wealthy is an idea popular in progressive circles, but hasn't gained a lot of traction as policy.

[Laura Nelson]

So we just decided we would do a first story and introduce people to the idea. And then we thought maybe that would be the end of it for a while. That was obviously not the case. This specifically kind of took root with the billionaire class and the hyper wealthy in the Bay Area tech scene, and it caught fire from there.

[Gavin Newsom]

In California, a proposed ballot measure that would tax the wealthiest people in that state sparked some pretty intense backlash.

[Jessica Mendoza]

California's ultra wealthy railed at the idea.

[Gavin Newsom]

Anyone who has assets over a billion dollars net of their debt has to pay a one time tax of 5% of their net worth, including their private stock, including their real estate. You said 5%. 5%.

[Jessica Mendoza]

While the proposal's advocates insisted it was necessary, supporters say the emergency billionaire tax.

[Suzanne Jimenez]

Will prevent a statewide health care collapse.

[Jessica Mendoza]

How would you describe what's at stake in this billionaire tax debate?

[Laura Nelson]

How California specifically will address and work with, or work against its wealthiest residents moving forward. One of the things that we've heard kind of coming up as this debate has become more public is the idea that maybe California doesn't really want its hyper wealthy, its billionaires to be here anymore. And so I think there's something about the relationship between billionaires and the state that is kind of hanging in the balance.

[Jessica Mendoza]

Welcome to the Journal, our show about money, business and power. I'm Jessica Mendoza. It's Thursday, February 12th. Coming up on the show, the proposed tax that's infuriating California's wealthiest.

[Sponsor Narrator]

This episode is brought to you by UnitedHealth Group. Today, too many patients aren't getting the care they need. That's why UnitedHealth Group is innovating how healthcare is delivered, offering creative solutions that focus on patient outcomes, preventing disease before it starts making care easier to get and less expensive. Reshaping care to help more people live healthier lives. Learn what UnitedHealth Group is doing to help people get the care they [e-mail] mission.

[Jessica Mendoza]

The idea to tax billionaires assets in California was proposed by an influential healthcare workers union. It was introduced to try and solve a big how to fund the state's Medicaid budget. Medicaid, which provides health insurance for low income Americans, is set to see huge cuts as a result of President Trump's one big beautiful bill which passed in the summer. The union estimates that California's Medicaid funding could lose about $100 billion billion with a B.

[Laura Nelson]

And that is a hole in the budget that is so large that filling it is very challenging. Right.

[Suzanne Jimenez]

The state of California is looking at losing $100 billion in health care funding for the next five years.

[Jessica Mendoza]

Here's Union chief of staff Suzanne Jimenez talking to a news station in Sacramento.

[Suzanne Jimenez]

And 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.

[Laura Nelson]

And that is the argument that this health care union is making that's sponsoring the billionaire tax is that in order to find that kind of money to backfill this cut, you have to look for a new source of revenue that brings in money that previously, you know, the state had not been tapping.

[Jessica Mendoza]

Why turn to billionaires specifically?

[Laura Nelson]

I think the union has argued that billionaires are, they have the money. I mean, and just to put it really bluntly, they have the money. Right? Like in a way that like middle class people who are feeling more and more squeezed as we look at inflation and what some people have described as a cost of living crisis. It is really hard to talk about raising taxes on middle class Americans. But their argument that the billionaires can afford it.

[Jessica Mendoza]

Just to take a step back, you talked about people being reluctant to tax the middle class. What is the cost of living situation in California right now?

[Laura Nelson]

So California is an expensive place to live. I think as people generally know, rent is high here, the cost of gasoline is high here. Everything is expensive here. But the disparity in terms of the richest and the poorest residents of California is really stark. The poverty rate here, adjusted for both living costs and government benefits, is tied for Louisiana for the highest in the country. So it is difficult to be poor here.

[Jessica Mendoza]

The proposed tax would apply to people who live in California and have a net worth above $1 billion. The union estimates there are about 200 people in the state who fall in that category. So how would this billionaire tax actually.

[Laura Nelson]

Work the way that this tax would work? I mean, structurally it's very different from the way that taxation has worked in the United States historically, which is that when something changes hands, then you pay taxes. So that could be, you know, if your salary, the government takes a cut when it lands in your bank account. That could be when you sell an asset like a share of stock or a house or a painting. If you make a profit, the government gets a cut of that.

[Jessica Mendoza]

So that's how taxes typically work in California. Residents, including billionaires, mostly pay taxes on their annual income or realized capital gains. But for the ultra wealthy, much of their net worth is often tied up in assets and those are not taxable. That could change if this proposed tax takes effect.

[Laura Nelson]

So that would mean tax collectors beginning something new, which is to take a look at the assets that people own and value them, and then impose a tax on the value of those assets. So that could include stocks, that could include artwork, that could include intellectual property rights, that could be voting rights in a company that you started or helped to start. And the tax would apply to people who lived in California as of January of this year.

[Jessica Mendoza]

The proposal does raise some thorny questions, like how would auditors determine the value of an asset?

[Laura Nelson]

So with a public share of stock, you at least know if you have a share of Starbucks, you know how much it trades for on the market. Right. But if you hold a share of a company that's privately held that has not had an initial public offering, how do you value that? Right. How do you value something that isn't, hasn't changed hands, that you just own? And that's all really untested territory.

[Jessica Mendoza]

And the proposal still has to make it onto California's ballot in November. For that to happen, the union has to collect a lot of signatures.

[Laura Nelson]

If you have ever been in California and you've been asked to sign a petition outside a grocery store or like the farmer's market or your kids soccer practice, you are probably participating in the state's ballot measure process. So every campaign has to collect a certain number of signatures to get their measure in front of voters. And it's pegged to the number of people who voted in the last gubernatorial election. This year, it's about 875,000 valid voter signatures.

[Jessica Mendoza]

And even if the proposal makes it on the ballot, a majority of Californians have to vote yes for it to take Effect. The billionaires are obviously thrilled about all of this.

[Laura Nelson]

Right?

[Jessica Mendoza]

This is great.

[Laura Nelson]

They're excited. Yeah, no problem. Nobody's had any issues with any of runs the gamut, right? So I've spent a lot of time over the last couple of weeks talking to billionaires and to people who work with billionaires and who know them. And there is like a broader spectrum of public opinion on this. Jensen Huang, who runs Nvidia, basically said, like, we choose to live in California. If California wants to do this, then like, California can do that. And there is like a segment of people who are very much in that category. Right. Then there's a group of people who are very upset.

[Jessica Mendoza]

Coming up next, the billionaires strike back. When times are tough, I turn to my group chats for advice and support. As it turns out, the ultra wealthy aren't that different. And as the proposed California billionaire tax was gaining steam, the billionaires themselves were texting away. It happened on a signal chat called Save California. Our colleagues discovered it when it was active earlier in the year.

[Laura Nelson]

The chat included dozens of tech and Silicon Valley elites, including David Sachs, who is a venture capitalist and the AI and crypto czar for the Trump administration, and Chris Larson, the co founder of Ripple, who is a big Democrat. So on opposite sides of the political spectrum. And in some cases, the people participating in this chat proposed some alternative to what this union has been pushing. And in some cases, they talked about their efforts to lessen or weaken their ties to California for tax reasons.

[Jessica Mendoza]

One message to the group chat said they should aim to be quote, pro prosperity for all. Others blasted the proposal as, quote, communism and poorly defined. Some messages warned that it would lead to tech founders pulling up their companies and getting out of the state. But leaving California takes more than just a moving truck. A person leaving the state would have to prove that California is no longer their place of residency. And that can be complicated.

[Laura Nelson]

There are 19 factors that the state uses, 19, yes, 19 to determine whether someone lives here or somewhere else. And it's kind of subjective.

[Jessica Mendoza]

I asked Laura to list some of those factors from memory.

[Laura Nelson]

Do you have real estate in multiple states? And if you do, how big are the houses and how expensive are they? If you have artwork, where do you keep it? Where do you keep your wine collection?

[Jessica Mendoza]

Where are you registered to vote? Where are you registered to drive?

[Laura Nelson]

Did you keep your country club membership in Southern California or are you now a country club member in Florida? Did you break up with your synagogue or your church? Did you find a new one in your new state?

[Jessica Mendoza]

Do you have a new veterinarian, a new dentist, a new doctor, or do.

[Laura Nelson]

You still go to those professionals in California?

[Jessica Mendoza]

Do your phone calls come from California toll pass records?

[Laura Nelson]

How many times did you go through the express lanes? The list goes on and on. And so if you're the kind of person who lives your life in multiple states, to make the case that you no longer live here can be quite difficult.

[Jessica Mendoza]

Still, despite all that, some billionaires are packing up.

[Laura Nelson]

David Sachs has said that he's moved to Texas, and Larry Page, the co founder of Google, has engaged in some real estate transactions. So there are a couple of people who are very hyper. Some of the richest people in the world who have reported that they are no longer living here or that they are trying to reduce their ties to the state, which is a big deal for the state and for its budget.

[Jessica Mendoza]

That's because about one sixth of California's tax revenue comes from the top 0.1% of earners as of 2023. And losing some of that over a potential new tax is concerning for some state leaders.

[Laura Nelson]

So the governor, Gavin Newsom, has come out and said he doesn't think it's a good idea.

[Gavin Newsom]

It's a badly drafted effort. It's already had an outsized impact on the state.

[Laura Nelson]

He doesn't support wealth taxes. He never really has.

[Gavin Newsom]

It does not support our public educators, does not support our teachers and counselors, our librarians. It doesn't support our first responders and firefighters. It doesn't support the general fund.

[Jessica Mendoza]

In January, political strategists with ties to Newsom launched a political action committee called Stop the Squeeze to oppose the tax. One campaign strategist said that the proposal, quote, opens up a can of worms sliding down a slippery slope by taxing cars, houses, wheelbarrows, and everything else. And what does the union behind the tax proposal said about people leaving?

[Laura Nelson]

The union's position has been that they expect that only a very small number of people will leave or have left as a result of the proposal.

[Suzanne Jimenez]

We really believe that the benefit from this tax is going to outweigh, you know, maybe a couple people moving out of the state because we're really heading towards a health care crisis where we are going to see billions of dollars cut from our healthcare system.

[Laura Nelson]

Legislative analysts in California have suggested that the number of people leaving over the tax or the specter of the tax could result in losing quite a bit of revenue over the long term. But it's all speculative. So one of the many interesting things about this discussion is we aren't really sure exactly how it will shake out. It's going to take a number of years before we really know.

[Jessica Mendoza]

What is the story ultimately about? Is it a story of a state responding to a federal policy that's affecting its residents? Is it more about a growing movement against the ultra wealthy? Is it something else? All of those things?

[Laura Nelson]

I think it's a story about what is the state's relationship to its wealthiest residents? What do they owe the state and what does the state owe them? And these are people that pretty much everybody has an opinion on. The hyper wealthy people are interested in them. They're interested in their companies, they're interested in their contributions. They're interested in what they see as them not paying their fair share. All of these things are like, fully up for public discourse. And in this like era when there's been a lot of discourse about whether the ultra wealthy are paying their fair share or what they're contributing or whether they're not contributing enough, it's like a real sore spot. And this measure is bringing this debate to the fore. It's really like 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.

[Jessica Mendoza]

That's all for today. Thursday, February 12th. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Emily Glaser and Juliet Chung. Thanks for listening. See you tomorrow.