How Billionaires Can Pay Without Paying Everything at Once

VOTE YES ON PROP 40

Vote Yes on Prop 40. Asking billionaires to contribute does not require pretending that every dollar of their wealth sits in a checking account.

The facts at a glance

Five annual installments are an option, not five separate annual wealth taxes. [1]

Later unpaid balances carry a 7.5% annual nondeductible deferral charge. [1]

Qualifying deferral arrangements carry conditions and reporting duties. [1]

Start with the amount owed—not the form of every asset

The proposal taxes covered net worth, subject to its exclusions, debts, and rate rules. A taxpayer’s holdings may include public shares, private businesses, and other assets. The full rate is 5% with the rate phasing in between $1 billion and $1.1 billion of net wealth. [1]

The tax is not a direction to sell an entire company or turn over all wealth to the state. A payment obligation and the ownership of an asset are different things. The statute supplies options for how a covered person can satisfy that obligation. [1]

The five-year option spreads principal payments

Under section 50301(c), a taxpayer may pay annually in five equal installments beginning in the year the tax is due. Each subsequent installment also carries an annual nondeductible charge of 7.5% on the remaining unpaid balance. It is therefore a payment schedule—not an interest-free exemption. [1]

For an illustration, suppose a taxpayer has $2 billion of covered net worth and is subject to the full 5% rate with no other adjustments. The principal tax would be $100 million. Five equal principal installments would be $20 million each, with the statutory charges added as applicable. [1]

A separate option addresses qualifying illiquid holdings

Section 50304 establishes an optional deferral account for qualifying individuals whose tax liability exceeds the specified publicly traded assets. The arrangement attaches to identified assets under an agreement with the Franchise Tax Board and includes reporting and future payment rules. [1]

This option is not a general promise that taxpayers can postpone payment indefinitely without cost. Eligibility, the attached assets and the agreement’s terms matter. Its purpose is to provide a collection mechanism where ordinary liquid holdings may not cover the obligation. [1]

The value is not just a taxpayer’s guess

Publicly traded assets generally use market value on the valuation date. Nonpublic business interests follow additional rules, with an appraisal route for rebutting specified presumptions. Other covered assets can also require certified appraisals under the statute. [1]

The Franchise Tax Board is assigned examination and enforcement duties. Existing income-tax administration, collection and appeal procedures apply to the extent consistent with this part, alongside the measure’s additional provisions. [1]

Administration and public spending are separate

The measure allows a start-up loan of up to $50 million for actual and necessary administrative costs in the first year following passage. That is a start-up authorization, not a promise that all future administration costs are capped at $50 million. Administrative costs are accounted for before the 90/10 allocation. [1]

Once allocated, the healthcare account can support coverage and providers and help prevent closures and service cuts. The payment arrangements are part of collecting revenue for those purposes, not a reason to lose sight of why the funding matters. [1]

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Each reference identifies what it establishes. A cited agency or researcher is not automatically a campaign endorser.

Vote Yes on Prop 40.

Vote Yes on Prop 40. The measure combines a targeted contribution with payment rules and a clear healthcare purpose.

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