San Jose mayor calls California’s proposed billionaire wealth tax an “incredible risk”

By Max Darrow

Some people think a proposed tax on California’s billionaires to make up for cuts in federal funding to hospitals and healthcare programs will drive money out of the state. 

To Seema Kanani, a medical social worker for a major hospital system in Northern California, it is time to sound the alarm about the future of healthcare in the state.

“We need to do this now. We can’t wait 5-10 years,” she said. “We are at risk in the near future, actually, of having hospitals, ERs, and community clinics close down.”

She’s been a member of the healthcare justice union, the Service Employees International Union – United Healthcare Workers West (SEIU-UHW), for 19 years.

Her union is proposing a billionaire wealth tax to make up for massive federal healthcare spending cuts that are set to take place over the next decade, which will largely impact middle- and lower-income Californians.

“A lot of my patients will choose to kind of ration their diabetes medication or other medications they cannot afford because they have to choose between paying their electricity bill or getting their medication,” Kanani said.

The idea is to levy a one-time, 5% tax on the wealth, not income, of billionaires that live in California.

“There are over 200 billionaires just in California. So, it’s time for them to step up and do their part for the state that has given them so much,” she said. “This is not meant to be a long-term fix. That’s why it’s an emergency, one-time tax. It’s not a long-term tax.”

A December analysis from California’s non-partisan Legislative Analyst’s Office revealed the proposed billionaire tax would likely generate tens of billions of dollars for the state over several years. It also notes that state income tax revenues would likely decrease by hundreds of millions of dollars per year on an ongoing basis if the ultra-wealthy were to leave the state.

The latter is what San Jose Mayor Matt Mahan fears will happen if the idea comes to fruition.

“We will actually increasingly have to rely on middle-class and working families to fill that gap. That’s who will lose here. People who will benefit are the taxpayers of Texas and Arizona and Florida, who will now have more billionaires relocating to their state and sharing in the burden of paying for their public services and infrastructure,” Mahan said.

Mahan believes the concept would do more harm than good in the long-run for California.

“It’s an incredible risk. We are talking about putting at risk the driver of our economy, the job creation engine of California, for a one-time tax, to subsidize a system that is ripe with waste, fraud, and abuse,” he said. “Let’s get serious about tackling economic inequality by closing loopholes, not pushing capital out of state.”

He acknowledges there are bigger-picture solutions needed for addressing wealth inequality in the Bay Area, California, and the nation.

“Wealth inequality is a very real issue. It deserves serious solutions. I think there are a number of them out there that we ought to pursue. We make it far too easy for very wealthy individuals to avoid paying taxes on their accumulated assets. I’ve heard from folks who are quite wealthy who acknowledge that they can borrow against their assets and never pay taxes on them – they can pass them on, tax-free, to their heirs,” Mahan said. “There are very real ways that are pragmatic that we could, at a national level, close massive loopholes related to wealth accumulation that would level the playing field, generate additional public revenues, and really, create a more fair economy for everyone.”

From Kanani’s standpoint, this step is needed to help save California’s healthcare system, and it is not meant to be a silver bullet for solving wealth inequality.

“The life and the American Dream that California is known for is not going to exist if the healthcare collapse happens,” she said. “I would welcome anyone that has other ways to tackle this to suggest so.”

She’s hopeful the proposition will receive enough petition signatures and will be put to voters in November. It will need 874,641 signatures by June 24 to qualify for the November ballot, according to Ballotpedia.