Prop 40, The California Billionaire Tax Act, is sponsored by Service Employees International Union-United Healthcare Workers West (SEIU-UHW). The proposed ballot initiative, which will be put before the state’s voters this November, aims to apply a one-time, 5 percent tax on billionaire wealth, spread over five years.

According to SEIU-UHW, the One Big Beautiful Bill Act (OBBBA), which was passed by Congress in July 2025, drastically cut California’s healthcare funding by $100 billion over the next five years. The union says the “5 percent emergency [billionaire] tax” will apply to about 200 Californians who currently hold a combined wealth of $2 trillion. SEIU-UHW adds that the revenues raised will “prevent a healthcare disaster and fund public K-14 education and state food assistance programs.”

SEIU-UHW estimates that without those revenues, California will have to cut 145,000 healthcare workers and eliminate a host of services, including emergency, labor and delivery departments. The union is further concerned that the federal funding cuts will lead to broad increases in insurance premiums and loss of coverage for millions of Californians, and is thus making an urgent appeal to the state’s billionaires to step in and help.

The initiative’s sponsors published a fact sheet that is followed by a list of FAQs. One of them asks why the tax applies only to billionaires. Part of the answer to that question states: “California is a unique place. We have 200 billionaires who live here and who have relied on the advantages of our state to build their immense wealth.”

Two thoughts came to mind after I read that answer. First, many other states are likely reeling from the same deep healthcare funding cuts that California is facing. However, not every state is as fortunate as California is in having such a large number of fabulously wealthy people who could be tapped for money. What happens then to the people who live in the unlucky states?

Whether those ultrawealthy Californians are willing to open their wallets is an entirely different matter. But clearly, there is a benefit to having them around.

Second, I was fascinated by the description of California as a “unique place.” That may be true, but of the approximately 39.4 million residents of the state, only 200 have managed to become billionaires. In theory, California’s amazing resources, which those wealthy individuals relied on to acquire their enormous fortunes, were available to the rest of the state’s population. The fact that not many could take as much advantage of them as the billionaires and centibillionaires did, points to the special nature of that small group of people.

California has beautiful weather that may attract some people to the state. Boston is snowy and cold, and Seattle is rainy, yet both places have clusters of tech industries similar to San Francisco and Silicon Valley. There is nothing uniquely magical about California, contrary to what SEIU-UHW might claim. What is true is that a handful of places in the U.S. are blessed with certain attributes, such as world-class universities. These institutions benefit from federal research funding and bring together extremely talented people. Together, they create ecosystems that spawn amazing companies, which go on to generate immense wealth.

By pointing to the supposed uniqueness of California as the basis for taxing the state’s billionaires, SEIU-UHW inadvertently perpetuates the economic inequality that we all complain so much about. In the name of fairness, the union should instead team up with other organizations around the country to put pressure on the federal government to rescind its healthcare funding cuts.

California Governor Gavin Newsom has a better idea. He rejects a state billionaire tax in favor of a national wealth tax. If implemented, those federal revenues could help residents of all states, even those without billionaires.