Economy|HealthCalifornia mulls a billionaire tax, revealing a deeply divided stateBillionaires have threatened to leave the state to avoid paying a tax that would replace the US government’s cuts to Medicaid.

San Francisco, United States – Recent legislative changes in California, introduced by the One Big Beautiful Bill Act (OBBBA), are impacting Medi-Cal eligibility requirements. The act, enacted in July 2025, mandates that patients, including those with complex medical conditions, must complete eligibility paperwork biannually to retain their coverage.

The OBBBA aims to reduce federal expenditures by $100 billion by increasing the frequency of eligibility assessments, enforcing work requirements for capable individuals, and eliminating coverage for those deemed ineligible. This requirement is particularly challenging for patients with cognitive disabilities, who may struggle with understanding and completing the necessary documentation.

In response to these changes, the California Service Employees International Union (SEIU-UHW) has proposed a one-time 5% tax on individuals with assets exceeding $1 billion. This measure is intended to offset the financial shortfall caused by the federal funding cuts.

The proposed tax has generated significant debate within California. Prominent tech billionaires have expressed concerns about the potential impact on the state's economic environment, citing fears that it may deter investment and innovation. Some business leaders argue that the tax could weaken the economic ecosystem that supports employment and public services.

As a result, several billionaires have reportedly relocated to other states to potentially avoid the tax implications. This includes notable figures in the tech industry who have moved their residences and businesses out of California.

California, if considered independently, ranks as the world's fourth-largest economy. However, the wealth disparity within the state remains pronounced. The proposed tax aims to address this by targeting the ultra-wealthy, yet it has raised concerns about discouraging innovation by taxing intangible assets such as equity shares in startups.

Governor Gavin Newsom has voiced caution regarding the measure, suggesting it may not pass and advising against relocating due to the proposed tax. Meanwhile, political analysts suggest that the measure could qualify for the November ballot, though it may face legal challenges if approved.

As discussions around the proposed billionaire tax continue, the potential impact on California's budget and social services remains a critical concern. With the deadline for signatures approaching, stakeholders are closely monitoring the developments as the proposal could lead to significant changes in the state's fiscal landscape.

Based on reporting by Al Jazeera.