The lynchpin of the Democratic Party’s control over California is not elected officials but the million-plus members of government unions who collectively send more than a billion dollars a year to union leaders to maintain political dominance. However much Democrats may believe they run Sacramento, moments of conflict reveal where power truly lies. This is a lesson Gov. Gavin Newsom (D-CA) is confronting as he battles an effort by the Service Employees International Union to seize billionaire assets.
The specific local affiliate sponsor of the “2026 Billionaire Tax Act” is the Service Employees International Union-United Healthcare Workers West, which represents hospital staff, mostly at nonprofit entities such as Kaiser Permanente, Sutter Health, and Dignity Health. However, the SEIU-UHW also includes government workers at government hospitals, including the USC Medical Center, Zuckerberg San Francisco General Hospital, and Highland Hospital in Oakland.
More importantly, the parent SEIU includes both SEIU Local 1000 and SEIU-National Association of Government Employees, which together represent more than 100,000 government employees. With the California Teachers Association, California Federation of Teachers, California School Employees Association, and the American Federation of State and Municipal Employees, they form a ready-made political organization that can collect almost all the 900,000 signatures needed to put the Billionaire Tax Act on the ballot.
The SEIU’s billionaire tax would impose what is said to be a one-time, 5% tax on the assets of people with net worths above $1 billion who live in the state as of Jan. 1 this year. The tax would apply to assets such as stocks and intellectual property rights, but not to real estate. Billionaires would have five years to pay. The SEIU estimated that its tax would bring in about $100 billion from 200 California billionaires.
The SEIU said this one-time asset seizure is necessary to offset the fiscal damage caused by President Donald Trump’s One Big Beautiful Bill Act. But California’s Legislative Analyst’s Office estimated that the legislation would only cost California $5 billion at most through 2030 (that is the farthest out the LAO offers numbers for).
So if the One Big Beautiful Bill Act is costing California only $5 billion, why are government unions calling for a $100 billion tax hike? It may have something to do with the fact that the LAO is also projecting an $18 billion deficit for California this year, followed by $35 billion in annual deficits as far as the eye can see.
These are structural deficits caused entirely by profligate spending, almost all of which was pushed by government unions. From constitutionally mandated spending on education (without any accountability or reform), to expanded Medi-Cal benefits, to exorbitant contracts with automatic raises, generous health benefits, overtime rules that permanently inflate payroll, and crushing pension contributions, California’s government unions have every incentive to maximize spending even if it means endlessly raising taxes on those that have made the state the wealthiest in the country.
Longtime California business leaders, such as Peter Thiel and Larry Page, are preparing to leave the state if the SEIU ballot measure becomes law, to which Silicon Valley’s Rep. Ro Khanna (D-CA) replied, “I echo what FDR said with sarcasm of economic royalists when they threatened to leave, ‘I will miss them very much.’”
California already relies disproportionately on its wealthiest citizens for the nation’s largest state budget, and even a dozen such successful entrepreneurs leaving the state would worsen California’s deficit problem.
WHAT THE ‘DONROE DOCTRINE’ DOES AND DOESN’T MEAN
Last year, when Newsom tried to force state employees back into the office at least four days a week, government unions pushed back with a well-funded campaign, and Newsom caved. This year, Newsom is reportedly working with his political consultants to defeat the SEIU billionaire tax, arguing that it would drive away too many high-income earners, making the state more financially unstable.
In the end, a billionaire tax will not fix California’s finances because the problem is not too few taxes on the rich but a political system in which government unions’ greed for spending always comes first, and discipline never comes at all.