Proposition 40 will appear on the November ballot and if passed, would impose a one-time tax on taxpayers with a net worth over $1 billion.
The tax would apply to 200 Californians who exceed the required net worth. It would be due in 2027, but billionaires can spread the payments out over five years, according to California’s Legal Analyst.
READ MORE: The political debate over the Billionaire Tax Act
Paige Pellaton, a political science assistant professor, added to the explanation of Proposition 40.
“Approximately 90% of the tax revenue collected would be earmarked for health care spending — specifically to cover spending cuts made by the Trump administration to Medi-Cal, which provides cheaper health insurance for low-income Californians — and the remaining revenue would be put towards public schools and food assistance programs, like CalFresh,” she wrote in an email to Mustang News.
The proposition was created to help counteract different funding cuts.
“Congress cut $100 billion in health care funding from California over the next five years to pay for tax breaks to billionaires,” according to United Healthcare Workers West.
A YES vote on this measure means: The state would collect a one-time tax from billionaires equal to 5 percent of their wealth.
A NO vote on this measure means: The state would not collect a one-time tax from billionaires equal to 5 percent of their wealth.
No on Prop 40 is currently leading the polls, according to Ballot Pedia. U.S. Rep. Kevin Kiley, Gov. Gavin Newsom, gubernatorial candidate Steve Hilton, the California Teachers Association, State Building and Construction Trades Council of California and Planned Parenthood Affiliates of California oppose the initiative, according to CalMatters.Â
Pellaton adds to the possible consequences of federal cuts.
“Some projections suggest federal cuts to Medi-Cal could total as much as $190 billion over the next 10 years, which would put a lot of low-income Californians, seniors and those with disabilities at risk of losing healthcare coverage if the State isn’t able to make up the difference,” Pellaton wrote. “A one-time wealth tax would certainly help to delay the damage, but for how long?”
Ricardo Young, Cal Poly Campus Health and Wellbeing’s medical director, added his thoughts on Proposition 40.
“I think that anything that is a one-time tax has no lasting effects because the systems that depend on these revenues look out in 3 to 5-year horizons, and therefore, this won’t change any medium-term or long-term planning for them,” he said. “The potential effect of this proposition seems very transitory.”
Pellaton also raised concerns about the proposition’s potential effect on California’s reliance on high earners.
“How much people earn every year from their jobs matters a lot to the state’s financial health,” Pellaton wrote. “And we’re heavily dependent on strong jobs and stock markets to ensure we can pay all our bills.”
Delaney Cronin, a biomedical engineering sophomore, said she previously knew next to nothing about the proposition.
“Trusting that the money is used effectively, it could very much support a lot of lower- to middle-class families and boost our education systems,” Cronin said. “As a student, I would support extra money in these fields.”