Could a Billionaire Tax Actually Fix Healthcare? California Thinks So
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With expiring ACA subsidies and cost-prohibitive healthcare coverage at the forefront of the national affordability crisis, a state synonymous with vast wealth and high taxes offers a potential solution.
According to the AP, a prominent union is working to put a statewide measure on the ballot before California voters that would levy a one-time 5% tax on billionaires, with the windfall funding the gap left by federal cuts to health care for low-income residents.
But could the Service Employees International Union’s plan pass into law? Would it work if it did? And if so, could a similar model be implemented nationwide at the federal level?
Here’s what experts think about whether a billionaire tax will fix healthcare.
Can 200 1-Percenters Fix a Broken System?
California is home to roughly 200 billionaires — more than any other state — with a combined fortune of about $2 trillion, according to the San Francisco Standard. Oracle founder Larry Ellison alone has a net worth approaching $250 billion, Forbes reports.
Five percent of $2 trillion is $100 billion — more than half of the $188 billion that the California Budget and Policy Center cites as the cost of funding the state’s sprawling Medi-Cal program.
The Ultra-Rich Could Always Just Flee …
If the state comes for $12.5 billion of Larry Ellison’s money, he could always register his complaint with a plane ticket out of town. After all, plenty of other states have mansions.
“If California charges a big wealth tax, billionaires might just move to Texas or Florida,” said Geoff Knight, tax professional and founder and CEO of FileTaxOnline, which serves more than 2.5 million accounts. “Those states have no income tax at all. California cannot force people to stay.”
Tax attorney Chad Silver, CEO and founder of Silver Tax Group, agreed.
“The high-net-worth individuals can switch residency prior to the date of assessment,” he said. “And the courts frequently nullify state policies extending beyond the definite jurisdictional boundaries.”
… But Would They?
California’s billionaires could leave the state and take their enormous tax base with them — but would they?
A recent example suggests they might stay put and pony up instead.
“Here in Massachusetts, we instituted a millionaires tax in 2022, effective Jan. 1, 2023,” said Catherine Valega, CFP and founder of Green Bee Advisory. “Opponents feared a resource and brain drain, yet the opposite happened. While we expected more to flee to states like New Hampshire and Florida, we did not see that come to fruition.”
In 2025, Boston public radio outlet WBUR conducted a two-year retrospective that found revenue exceeded expectations and the state actually gained wealthy residents.
A Similar Federal Initiative Is Possible, But Not Plausible
When asked if a similar wealth tax could work at the federal level, the experts agreed: yes — but no.
“No Congressional action has been taken toward anything comparable to a wealth-based tax in over 100 years, and there is not a bi-partisan way out available at the present time,” said Silver.
Expungement attorney David Weisselberger, founder of Erase the Case, believes that even if such a politically dicey plan didn’t die in the Legislature, it would meet its doom in court.
“A federal wealth tax will face an even higher bar to enactment due to Article I, Section 9 of the United States Constitution, which mandates that all direct taxes be apportioned to the states by population,” he said. “Because wealth is not distributed uniformly throughout the states, a federal wealth tax could not be apportioned without resulting in absurdly disparate tax rates for citizens in different states, thus likely making it unconstitutional.”
So If Not That, Then What?
The California proposal likely won’t make the ballot — and even if it does and passes, the AP reports that Gov. Gavin Newsom would be unlikely to sign it into law.
However, the experts offered alternative solutions that could mitigate the national health care affordability crisis at the expense of the wealthiest Americans.
- Weisselberger suggests closing the stepped-up basis loophole, which resets the market value of inherited assets for heirs and negates any prior appreciation for capital gains tax purposes.
- Knight suggests taxing margin loans, which the rich take out against their stocks to use as tax-free income.
- Silver recommends raising the net investment income tax.
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