A Teachers Union in California Opposes a Wealth Tax. Will Massachusetts Get The Message?

California’s latest Service Employees International Union (SEIU) proposal to raise taxes on individuals with a net worth exceeding $1 billion is gaining more opposition every day – now from other unions. 

This week, the California Teachers Association came out against the measure, saying it won’t deliver on long-term education needs as proponents promised. Another organization, the California Medical Association also announced its opposition, claiming it would “increase budget volatility.” 

The growing opposition offers an important lesson for other states toying with similar proposals, including Massachusetts. Not all proposals to raise revenue would bring the state more cash, and the long-term economic consequences may outweigh any short-term fiscal gains. 

Problems with the California Wealth Tax

The so-called “Billionaire Tax Act” is a proposed ballot measure that would levy a one-time tax on individuals whose net worth exceeds $1 billion. The net worth calculation includes the value of any business holdings and assets, art, intellectual property, retirement accounts, property values, assets of any dependents, and more. Therefore, liable residents may have to pay the tax on the value of things that aren’t cash, and may even have to sell them to cover the tax bill.

The tax is also retroactive, meaning if the measure passes in November, any person claiming residence in California with a net worth of $1 billion or more after January 1, 2026 would owe the tax. 

The Wealth Tax Is Already Pushing Residents Out of California

The possibility of the wealth tax proposal is already causing billionaires – who often run businesses in the state that are contributing to the economy and creating new jobs – to move out. Google founders Sergey Brin and Larry Page moved business operations out of the state. An informal poll of billionaires found 15% have left California, often for states like Florida or Texas. Many more say they would relocate if the measure passes in November.

That’s a problem, because even though billionaires make up less than 1% of the state’s resident population, they pay nearly a quarter of all taxes in California, according to the Pacific Research Institute. According to San Jose Mayor Matt Mahan, taxes from billionaires make up nearly half of the state’s income tax revenue. Analysts estimate the state has already lost $1 trillion due to billionaires moving out. Entrepreneur David Friedberg estimates if the measure passes, the state could lose $20 billion in revenue every year – money the state has relied on for years to fund its programs.

San Franciscans are seeing the writing on the wall. A union-backed ballot measure to tax businesses more based on a comparison of executives’ pay to employees’ pay is currently trailing in the city’s primary election, with more than half of voters currently opposing as of the latest tally.

While tax hike opposition traditionally comes from more moderate and conservative leaning politicians, the growing concern over this wealth tax proposal is coming from across the political aisle. California’s Democratic Governor Gavin Newsom came out against the proposal. More recently, all but one of the current gubernatorial candidates voiced opposition as well, including former Democratic U.S. Rep. Katie Porter, and Former Biden administration Secretary of Health and Human Services Xavier Becerra.   

A California-Style Wealth Tax Would Crush Massachusetts

Massachusetts labor unions are already saying they want to bring the wealth tax to the Commonwealth. 

But Massachusetts’ existing high taxes – including a surtax on individuals’ income over $1 million – are already hurting the state.

• Massachusetts lost a net $4.2 billion in adjusted gross income in 2023 due to more residents moving out of state than in, and movers are primarily to lower-tax states like Florida and New Hampshire.
• Massachusetts is losing jobs (including in key industries such as science and technology and finance) and businesses at a rapid pace.
• Former Massachusetts residents say high taxes are among the top reasons they considered leaving the state, according to MOA polling.

The Commonwealth’s voters agree. More than two-thirds already say the surtax negatively impacts the state economy by driving high earners out, who shoulder a significant share of the state’s tax burden.

Conclusion

Governor Gavin Newsom was right about the wealth tax – and Massachusetts should pay attention. He said California must be competitive with other states, and the negative impacts of the proposed wealth tax would push California in the wrong direction. 

High taxes make it harder for residents to live and companies to start and stay in business. Increasing taxes on anyone – including high earners who typically have the capital to start and grow businesses – puts competitiveness out of reach. Massachusetts should take note unless they want residents and businesses to leave for lower-tax states and take their taxable income with them.