California’s push to tax its wealthiest residents is sparking backlash and warnings that billionaires could take their money and businesses out of the state.
According to reporting by the Los Angeles Times, union-backed activists in Los Angeles are advancing an “Overpaid CEO Tax” that would raise city taxes on large companies whose CEOs earn at least 50 times more than their median worker. Supporters rallied this week outside Elon Musk’s Tesla Diner in West Hollywood, framing the proposal as a response to widening income inequality and an ongoing affordability crisis.
At the state level, a separate billionaire tax proposal would impose a one-time levy of up to 5% on assets exceeding $1 billion. Backers say California is home to more than 200 billionaires, which is more than any other state. And their collective wealth has surged to more than $2 trillion, even as housing and living costs soar.
But critics argue the plan could backfire. Several high-profile billionaires have publicly suggested they may leave California if the tax moves forward, taking tax revenue and jobs with them. Governor Gavin Newsom has vowed to oppose the measure, warning the state cannot ignore competition from other states for wealthy residents.
The LA Times reports that state analysts caution California could lose hundreds of millions of dollars a year if billionaires relocate, even if the tax generates a short-term revenue boost. Supporters counter that the tax would affect only a small number of people and help protect funding for healthcare, housing, and social programs as federal support faces possible cuts.
Both the statewide billionaire tax and the Los Angeles “Overpaid CEO” measure are now in signature-gathering phases, setting up what could become a high-stakes political fight this November.
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