#news Fast Fact: Gavin Newsom's California To Start Taxing Savings Accounts To Make Up for $30 Million Budget Deficit
#california
California Labor Unions have advanced a ballot initiative that would slap a one-time 5% tax on the savings accounts of the states residents to make up for overspending in other areas like illegal migrants.
#tax
The so- called 2026 Billionaire Tax Act, filed on October 21 by the Service Employees International Union (SEIU), will hit the ballot in November 2026 if enough signatures are collected.
Supporters of the bill say it is a 'fairness fix' so that way healthcare and education can continue to be provided free of charge to illegal migrants as federal funding cuts loom.
#healthcare
However, Carl DeMaio says it's a punitive "Savings Tax" that invades retirement accounts, homes, and everyday wealth-building efforts, that will take away the incentives that push people to make, build, create and save.
The measure would tax California residents with a net worth of more than $1 billion as of December 31, 2026—those living in the state on January 1, 2026.
It targets wealthy individuals, potentially raking in up to $25 billion for a dedicated fund that will most likely be used for illegal migrant services.
Critics say that the 'wealth' tax will then start being charged to people who are worth $1 Million, then $250,000 then everyone in the state.
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Details from the initiative:
Virtually all forms of wealth qualify, from stocks and bonds to real estate, business interests, savings accounts, and retirement holdings.
Net worth is calculated as total assets minus legitimate debts, with strict rules to prevent shielding via loans or offshore maneuvers.
A flat 5% excise tax on net worth above the $1 billion threshold, with a slight taper for those just over the line (dropping by 0.1% for every $2 million below $1.1 billion).
Married couples are assessed jointly, and certain trusts could opt in or face proportional hits if funded by billionaires.
Limited breaks for qualified pensions and Roth IRAs (capped at $10 million aggregate), plus up to $5 million in other assets.
Taxpayers can defer payment on some holdings with interest-like charges, but distributions trigger withholding.
90% funneled to health care programs like Medi-Cal (Illegal migrant healthcare) to offset potential federal reductions, with 10% for K-12 education.
The fund caps at $25 billion annually, for now.
The Franchise Tax Board would oversee collection, with steep fines—up to 40% of underpaid amounts—for evasion.