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California Proposition is a one-time initiative to levy a one-time 5% tax on the accumulated wealth of taxpayers and trusts with covered assets valued over $1 billion, including shares of capital stock, bonds or other evidences of indebtedness, and any legal or equitable interest, to fund state health care programs, food assistance programs, and public education. The California wealth tax initiative would be the first ballot measure in the country to enact such a tax.

The tax includes shares of capital stock, bonds or other evidences of indebtedness, and any legal or equitable interest. It would be retroactive and apply to taxpayers residing in the state as of January 1, 2026 and would be due with an individual's 2027 tax filings. The initiative would allow individuals to pay the tax in five equal installments beginning in 2027, with each subsequent payment subject to an annual deferral charge of 7.5% of the remaining unpaid balance.

To determine an individual's net worth, the initiative would account for the following assets (real estate and pensions would be excluded from the calculation of net worth):

  • publicly traded securities at their market value on December 31, 2026;
  • private business interests;
  • assets under a sole proprietorship;
  • grantor trusts;
  • art, collectibles, intellectual property, vehicles, other financial instruments not publicly
    traded, and debts or liabilities owed to the individual ($5 million exclusion of total
    combined asset value from net worth);
  • Roth IRA or other Roth-type retirement accounts valued above $10 million;
  • property valued at more than $1 million transferred after October 15, 2025, for less than
    fair market value; and
  • dependent's assets in excess of $50,000.

Here are some of the arguments for and against the wealth tax initiative:

FOR

  • Proponents of Prop 40 argue that a wealth tax forces billionaires to pay a fairer share, as their wealth often grows much faster than their taxable income.
  • Taxing the ultra-wealthy can help manage state debt and reduce reliance on a volatile income tax system that relies heavily on a
    few top earners.
  • And it’s for a worthy cause: revenue from Prop 40 is intended to fund essential services, specifically to backfill Medicaid (Medi-Cal) cuts and support healthcare, schools, and firefighters.

AGAINST

  • Critics of Prop 40, including Governor Newsom, warn that it threatens to weaken the state’s start-up ecosystem as billionaires relocate to other states or reconsider investment decisions, leading to a loss of tax revenue, jobs and investment.
  • The top 1% of Californians already pay nearly half of the state's income taxes, making a wealth tax an unnecessary, extreme burden.
  • It would be cumbersome to calculate, particularly for private company shares, which may require complex valuations.

How This Meetup will Work
We'll start the meeting by asking everyone in the room for their vote on the topic -- Yes, No, or Abstain. Then we'll present arguments in favor of and against the wealth tax (6 minutes each). After that, everyone in the room will get to participate in a moderated floor discussion, up to 90 seconds at a time. A moderator will call on participants in order of their hand raising and will make sure that people are civil and take turns speaking. At the end of the floor discussion, we'll take a final vote on the question. When you give your final vote, you'll also have up to a minute to say what arguments you found particularly compelling, or what you've changed your mind about (if anything).

Our meeting will be conducted on Zoom. The Zoom link will be visible here on the event page before the event to those who RSVP. It's your choice to turn on your camera or not, but people who can be seen are often more persuasive. At SFDebate, everyone gets a chance to speak and is encouraged to do so, but no one is required to speak if they don't want to.

Some links for additional reading:

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