Unions sometimes destroy entire industries when they demand more than companies can afford.
In California, the union demanding a “billionaire tax” might just destroy the state itself.
The Service Employees International Union (SEIU) is one of the country’s most powerful unions, representing government workers. Its California branch is the SEIU-United Healthcare Workers West.
Its president, Dave Regan, is the principal organizer behind the “2026 Billionaire Tax Act,” which said this week that it has collected twice the number of signatures necessary to qualify for a statewide vote.
Though the California secretary of state has yet to review and approve the initiative, it looks like the “billionaire tax” will be on the ballot on Nov. 3.
We don’t know how much the union spent to put the tax on the ballot. That will be released by the secretary of state when it has officially approved the initiative.
What we do know is that the union likely spent a huge amount, both in hard cash and staff time, with expenditures drawing on various union funds.
The SEIU’s motivation is simple: 90% of the money that would be collected by the “billionaire tax” would be designated for health care spending. In other words, it benefits the union and its members directly.
The SEIU is pursuing that money, notwithstanding recent disclosures of significant fraud in California health care programs, including Medi-Cal, the local version of Medicaid.
After the Trump administration started examining fraud in hospices, California Attorney General Rob Bonta jumped into the act and discovered $267 million of Medi-Cal fraud in the hospice program. Bonta stated that over the last decade, such fraud amounted to $1.5 billion.
We can all imagine what the real fraud level is, across all of the state’s public health programs.
The SEIU doesn’t care. It is targeting the state’s wealthiest residents, before making sure funds already provided for health care are properly spent.
In effect, the unions are attacking California’s tax base. An unknown number of billionaires have already relocated out of the state. Some have done it very publicly — among them Larry Page, Mark Zuckerberg, Sergey Brin, Larry Ellison, and Peter Thiel. The amount of wealth that left with them is in the ballpark of $1 trillion. (That represents $50 billion in lost revenue under the proposed new tax.)
It is the undisclosed departures that may do the real damage. We don’t know about them, and will not know for some time.
Most of those leaving have a residence in other states, including states with no income tax, and have been working overtime with their lawyers and accountants to make sure their official residence is not in California.
To evade California residency, they may have to show that they have a driver’s license from another state; that they get their medical care there; and even that they attend a house of worship there.
(My money is on the tax pros versus the California bureaucrats on that issue.)
We are already seeing the devastating results of the SEIU’s gambit, regardless of whether the billionaire tax actually passes.
In 2024, California collected $129 billion in personal income tax. The top 1% pay 40% of that. The state stands to lose annual revenues of $13 billion if just 25% of those people vacate.
That does not include the revenue from the businesses and employees they are taking with them, which could easily hit $25 billion in the first year.
The SEIU has estimated that a “one-time” 5% tax on wealth will produce $100 billion in revenue. You don’t have to be a financial wizard to realize that will never happen.
That is because every time we are told that a “new source” of revenue will produce a claimed amount, the true amount is never even close to what they project.
The billionaires who do remain in California will also be hiring attorneys and accountants to hide or devalue their assets and assure that they pay as little of the new tax as possible.
You’d better believe they are planning that already. None of them has the cash on hand to pay the prescribed 5% of their net worth. They could be forced to liquidate assets, including their stock of California-based companies.
That will drive down asset values for the billionaires — and also for all of the employees and all the California residents who hold the stocks in their 401(k) accounts.
Economic harm will spread among the residents of the state and boomerang, causing even less tax revenue to be collected.
All this to pay more into government health care programs riddled with fraud, and to punish people for creating jobs and wealth for people throughout California and the country.
The SEIU’s billionaire tax could impoverish California for generations. No billionaire comes close to that kind of destructive greed.
Bruce Bialosky, a former presidential appointee, is a certified public accountant specializing in taxes.
