Proponents of the 2026 Billionaire Tax Act—a California ballot initiative—insist the measure is a temporary, one-time 5% levy. Under the proposal, the tax could be paid upfront or spread over five years. However, skeptics and billionaires alike are wary. Many high-net-worth individuals fear that if the tax is approved this fall, it will evolve into a permanent fixture of the state’s tax code, a concern that may drive a preemptive exodus from the state.
There are several compelling reasons to believe these fears of “policy creep” are justified.
1. Permanent Spending, Temporary Funding
The official rationale for the tax is to offset federal healthcare funding cuts under H.R. 1. Proponents aim to maintain and even expand state-level coverage. While the future of federal policy is uncertain, California’s healthcare costs are unlikely to drop back down once expanded. Using a one-time tax to fund recurring, long-term social programs creates an inevitable “funding gap” that usually leads to tax extensions.
2. The Proponents’ True Agenda
The architects of this ballot measure—prominent tax law professors and economists—have a long history of advocacy for permanent wealth taxes.
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Past Efforts: The same team drafted California wealth tax bills in 2021 and 2023 that were intended to be permanent.
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National Coordination: These drafters are part of a multi-state effort (including Washington and Hawaii) to tax high-net-worth households.
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Federal Ties: They are also involved in Senator Bernie Sanders’ proposals for a permanent federal wealth tax. While the “one-time” label may be a political concession to win over voters, the ideological goal of the authors is clearly a permanent shift in tax policy.
3. The “Sticky” Nature of Temporary Taxes
History shows that in California and across the U.S., “temporary” taxes rarely expire on schedule.
| State | Original Tax Intent | Current Status |
| California | 2012 income tax surcharge (7 years) | Extended in 2016; voters may make it permanent this year. |
| New York | 2009 “Millionaire Tax” (2 years) | Extended multiple times; now active through at least 2032. |
| New Jersey / Illinois | Recession-era “temporary” hikes | Most have become permanent or been replaced by higher rates. |
States are notoriously reluctant to surrender new revenue streams, especially when they become dependent on them for annual budgets.
4. Economic Backfire and the Tax Base
A one-time wealth tax could inadvertently create the “necessity” for a permanent one. If the tax triggers an exodus of billionaires, California’s overall tax base—particularly its reliance on personal income tax—will shrink. This underperformance could be used as a future justification to tax remaining wealth even more aggressively to plug the resulting budget holes.
5. Constitutional Hurdles and Legal Loopholes
Currently, the California Constitution caps the taxation of “intangible personal property” (like stocks and bonds) at 0.4%.
The 2026 Act seeks to supersede this limit. While the initiative’s language specifies it is a “one-time” event—making it legally difficult for the legislature to extend it without another public vote—legal experts worry about “creative” interpretations. For instance, the state could argue that the tax is “one-time” for each individual, applying it to new billionaires as they emerge, or simply use the established collection infrastructure to push for a permanent amendment later.
The Bottom Line
While the 2026 Billionaire Tax Act is framed as a limited intervention, the combination of permanent spending goals, the ideological bent of its creators, and the historical precedent of “temporary” taxes suggests a high probability of extension. For California’s wealthiest residents, the decision to stay or go may depend on whether they believe a “one-time” tax is truly the end of the story—or just the beginning.