Why Billionaires Can Afford to Contribute More

VOTE YES ON PROP 40

Vote Yes on Prop 40. Extraordinarily wealthy billionaires can support a shared need: care that is available when a person or family needs it.

The facts at a glance

Wealth and annual income are different tax bases. [1][2]

A sale and an increase in an unsold asset’s value are different tax events. [2]

Prop 40’s proceeds have designated healthcare, education, and food purposes. [1]

Income is what comes in; wealth is what someone owns

A paycheck is income. Shares, business ownership, and other assets contribute to wealth. A person can hold highly valuable assets without selling them all or receiving their full value as income that year.

The IRS explains capital gains in terms of the difference between the proceeds of a sale and the asset’s adjusted basis. A rise in the value of an unsold asset is not the same event as realizing that gain through a sale. Exceptions and other tax rules exist, but the basic distinction is essential. [2]

Why the distinction matters at billionaire scale

Consider a hypothetical holding bought for $100 million that becomes worth $1 billion while the owner keeps it. The owner has a much more valuable asset. That does not mean the entire $900 million increase has automatically become a realized capital gain from a sale. [2]

Prop 40 targets covered net worth rather than waiting for every asset to be sold. It contains rules for measuring that wealth, including publicly traded shares and nonpublic interests, while excluding specified assets. [1]

Federal rules can also affect inherited gains

The IRS says inherited property generally receives a basis equal to fair market value at death, or an applicable alternate valuation. That can change which gain is recognized when an heir later sells. There are exceptions, and estate taxation is a separate question. [3]

This is why “they already pay income tax” does not fully answer a proposal aimed at accumulated wealth. The taxes address different bases and different events. Whether to ask wealth to contribute is a policy decision—not a confusion between income and assets.

Washington’s choices make the question more urgent

The federal law commonly called the “One Big Beautiful Bill” changed healthcare funding while extending or expanding tax reductions for the wealthiest Americans. One example documented by the IRS is the $15 million basic estate-and-gift-tax exclusion for 2026. CBO separately describes the law’s projected cuts to Medicaid spending. [4][5]

We think California should respond by protecting care, not by accepting that families must absorb the consequences of healthcare funding cuts.

What Prop 40 asks—and what it leaves

At Prop 40’s full 5% tax rate, a hypothetical $2 billion in covered net worth produces a $100 million principal tax before any other relevant adjustments. Ninety-five percent of that starting covered value remains before payment charges, other taxes and market changes. This arithmetic illustrates the rate; it does not predict the taxpayer’s future wealth. [1]

The measure includes a phase-in near the threshold and payment options. It does not assume that all covered assets are cash or that the tax applies identically to every possible holding. [1]

A contribution with an identified purpose

After administrative expenses, 90% of funds go to healthcare and 10% to public education and food assistance. The healthcare funds are directed to support coverage and providers and help prevent closures and service cuts. [1]

Our recommendation is a matter of priorities: a modest tax on extraordinarily wealthy billionaires can protect essential services. Protecting care is worth asking those with the greatest resources to help finance it.

A few more answers

The people and institutions behind the evidence

People and organizations backing a Yes vote

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CHECK THE EVIDENCE

Sources behind this page

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. Ask billionaires to help protect the healthcare California needs.

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