As lawmakers push to tax extreme wealth to protect healthcare and education, audits and deficits raise a tougher question: is California’s problem revenue — or how it’s managed?
California is once again debating whether taxing its wealthiest residents more aggressively could stabilize public services and protect working families. Proposals circulating in Sacramento include a one-time 5% tax on billionaire net worth, aimed at generating billions without raising taxes on middle- and low-income Californians.
Supporters argue the math is simple: California is home to some of the world’s largest concentrations of wealth, while essential systems — healthcare, education, food assistance — remain fragile. Opponents counter that the state already collects enormous tax revenue and that the real crisis is how that money is managed.
For Latino families, who disproportionately rely on public services while also paying sales, payroll, and property taxes, the answer matters.
What Proponents Say the Revenue Would Do
Advocates say targeting the top 0.1% — an estimated 200 to 300 individuals — could raise as much as $100 billion over five years, depending on market conditions. They argue those funds could be directed to areas where cuts would hit vulnerable communities hardest.
Healthcare (Medi-Cal):
Proposed revenue is frequently linked to stabilizing Medi-Cal, which covers millions of Californians, including seniors, people with disabilities, and low-wage workers. Policy analyses cited by advocacy coalitions warn that without new funding, clinics and nursing facilities face closures as federal support tightens.
Education and Public Services:
Funds could help maintain K-14 education budgets without pushing districts to rely on local bonds that often raise property taxes — costs that ultimately hit renters and working families.
Food Assistance and Safety Nets:
Food insecurity remains elevated across California. Supporters argue wealth taxes could reinforce CalFresh and related programs at a time when inflation continues to strain household budgets.
The promise, they say, is protection: raising revenue from extreme wealth instead of shifting the burden onto those already stretched thin.
The Accountability Problem Critics Won’t Ignore
But a growing body of audits and fiscal reports raises an uncomfortable question: if billions more arrive, will they be managed any better?
Nowhere is that concern clearer than Los Angeles.
A March 2025 audit of the Los Angeles Homeless Services Authority (LAHSA), reported by multiple outlets including the Los Angeles Times, found officials could not reliably track roughly $2.5 billion in homelessness spending. Auditors described “total dysfunction,” including invoices approved without proof that services were delivered.
At the same time, legal liability costs tied to police misconduct and unsafe infrastructure have surged. City data show settlements exceeding $1 million more than doubled between 2022 and 2024, draining the general fund.
By June 2025, Los Angeles declared a fiscal emergency amid a projected deficit nearing $1 billion. The approved $14 billion budget for 2025–26 includes hiring freezes, service reductions, and the elimination of more than 600 city positions. The City Controller publicly warned that years of overly optimistic revenue assumptions had eroded reserves.
The Question California Can’t Avoid
This is the fault line in the billionaire tax debate. Is California under-taxed at the top — or is it failing to enforce priorities, oversight, and accountability with the money it already collects?
For Latino communities, the answer is not ideological. It’s practical. Families need healthcare clinics that stay open, schools that function, and homelessness programs that actually house people.
Whether new taxes are justified may ultimately depend less on how much California raises — and more on whether residents can trust the state to manage what it already has.
