California's proposed 5% billionaire wealth tax heads to a November 3 vote amid a fierce fight

A proposal to impose a one-time 5 percent tax on the net wealth of billionaires in the US state of California has sparked intense debate. The measure, known as Proposition 40, would tax the wealth of around 200 billionaires to raise 100 billion dollars to tackle a funding crisis in healthcare. State residents will vote on it in the November 3 election.

California is the largest state economy in the United States and the world's fourth-largest economy. It is home to wealthy and famous figures such as Oprah Winfrey, Meta chief Mark Zuckerberg, reality TV star Kim Kardashian and filmmaker George Lucas.

Yet the same state also has the highest number of homeless people in the United States and stark wealth inequality. That contrast has sharpened the argument on both sides of the proposal.

Francesco Trebbi, a professor of public policy at the University of California, Berkeley, says the proposal is the first billionaire tax aimed at the ultra-rich at the very top of the wealth distribution, and that it could help reduce wealth inequality in California.

Supporters argue that if the ultra-rich pay a fair share of their wealth in tax, the state's budget shortfall will be easier to tackle. The prospect of reduced federal healthcare funding under President Donald Trump's sweeping tax and spending bill forms an important part of the backdrop.

Suzanne Jimenez, chief of staff of the Service Employees International Union-United Healthcare Workers West, which is campaigning for the measure, says the tax could be a short-term solution to a looming healthcare funding crisis. She told the BBC that without action the healthcare system could collapse, and that the tax would serve as a bridge until long-term funding is arranged.

Some billionaires also back the proposal. Nvidia chief executive Jensen Huang has said he has no objection to paying the tax, telling CBS in an interview that he has no problem with tax rising alongside income, and describing his own life as an example of the American Dream.

Businessman Tom Steyer has also said he will vote for the tax. Steyer, who ran unsuccessfully for California governor earlier this year, said that although there were problems with how the proposal was drafted, it is necessary to protect helpless and disadvantaged residents.

Vermont Senator Bernie Sanders has campaigned for the measure as well. At a rally in Los Angeles, he said billionaires believe they have a God-given right to rule like nineteenth-century kings, adding that November 3 could send a major message.

The proposal also faces opposition from some billionaires and political leaders. Google co-founder Sergey Brin has given more than 100 million dollars to a political effort opposing the wealth tax, according to the Los Angeles Times.

California Governor Gavin Newsom also opposes the proposal, fearing that wealthy residents could leave the state if the tax is imposed and that the government would lose important income-tax revenue — the fear at the heart of the campaign against it.

Opinion polling shows a tight race. A September survey by the Berkeley Institute of Governmental Studies and the Los Angeles Times found 45 percent of likely voters in favour, 42 percent against and 13 percent still undecided.

The measure needs a majority of the state's voters to pass. The November 3 vote will therefore decide whether a direct tax on billionaires' wealth is imposed in the United States for the first time — an outcome that could open a fresh debate about tax policy in other states as well.