Would California voters actually support a wealth tax on billionaires?

In a sense, California has been taxing wealth since it became a state 175 years ago.

Well into the 20th century, the state relied on taxing land and buildings which, in that agrarian period, were major forms of personal wealth. The state eventually imposed other taxes and by the 1930s, property taxes exclusively financed local services.

Today, despite the limit on property taxes imposed by 1978’s Proposition 13, levies on nearly $9 trillion in taxable real estate, generate about $98 billion in revenue each year. The money gets roughly split between school districts and local governments.

Despite those massive numbers, real estate no longer dominates Californians’ personal wealth, which now tops $30 trillion. About a third is residential real estate, with commercial real estate, investments, personal property and cash representing the rest.

It’s believed that California has about 200 billionaires who collectively have about $2 trillion in net assets, or approximately 7% of Californians’ wealth — overwhelmingly business investments, particularly in technology.

So, should taxing real estate be supplemented by tapping other assets of the state’s billionaires? Voters may decide this year because a wealth tax initiative is being circulated by a union representing health care workers. It would impose a one-time 5% tax, mostly on their investments, that would raise an estimated $100 billion.

It’s needed, Service Employees International Union-United Healthcare Workers West contends, to shore up vital health care services threatened by reductions in federal subventions and the state budget’s own deficits.

The proposal carries multiple philosophical, economic and political aspects.

Taxing wealth can be dated back to ancient Egypt. Since California already taxes real estate, why should other forms of personal wealth be exempted?

Moreover, California already taxes incomes on a sliding scale with the highest rates on those with the highest incomes, so shouldn’t a wealth tax be imposed using the same rationale?

Most of the 200 or so Californians who would be taxed would probably answer “no” to those questions. A few have already fled for states such as Nevada, Texas and Florida that don’t tax incomes.

In theory, those who haven’t already migrated would still be subject to the wealth tax because it would be backdated to Jan. 1, 2026. However, the tax would likely face legal challenges, and targeted taxpayers who haven’t already moved likely would argue that retroactive levies are illegal.

The sponsoring union could face opposition from unions representing other professions because they would see little or no benefit. Having it on the ballot could affect another measure, sponsored by public employee unions, that would continue a surtax on high-income earners that was first adopted in 2012 and later extended to 2030. It raises about $10 billion a year.

Meanwhile, Gov. Gavin Newsom is loudly opposed, contending that a wealth tax would drive wealthy people out of the state. The top 1% of wealthy Californians pay nearly half of the state’s income taxes.

Newsom last week called the measure “badly drafted,” arguing that its revenue wouldn’t be spread among other groups.

“It does not support our public educators,” he said. “Does not support our teachers and counselors, our librarians. It doesn’t support our first responders and firefighters. Doesn’t support the general fund and parks.”

While Newsom has long opposed wealth tax proposals, his obvious presidential ambitions surely play a role in his promises to lead an opposition campaign. The passage of a wealth tax could be weaponized in a presidential campaign.

Would California voters embrace a wealth tax on the ballot?

A poll commissioned by opponents and released Tuesday found that the measure obtained a bare plurality when a sample of voters was read its official wording, but declined when they heard a counterargument.

So who knows?