In November’s election, California voters will decide on a one-time 5% tax on the net worth of the state’s roughly 250 billionaires — Proposition 40. The tax could raise an estimated $100 billion, with 90% set aside for healthcare and the remainder for food assistance and education.

This is exactly the financial help that Los Angeles and the state need, to support hospitals and healthcare (especially Medi-Cal, the state’s Medicaid program). This sector is being devastated by the Trump administration’s budget cuts, which already have cost more than 200,000 L.A. County residents their Medi-Cal coverage. UC Berkeley researchers estimate that lost coverage could reach more than 1 million by 2028.

Advocates for the tax estimate that every lost Medi-Cal dollar costs L.A. County $1.85 in lost economic output, putting more than 63,000 jobs and $9 billion in economic activity at risk. Public Citizen predicts more than 80 California hospitals are at “heightened risk” due to the federal cuts, with more than 20 of them in L.A. County.

Six Nobel-winning economists just released a letter supporting the tax. The laureates point out that California billionaires are worth an estimated $2.3 trillion — yes, that’s trillion — up from $700 billion, an increase of more than 220% in one decade. They can afford it.

Economist Teresa Ghilarducci has outlined the pro-tax case in more detail. Billionaires aren’t footloose tax avoiders who would flee the state as critics warn. These residents are embedded in California communities, businesses and homes. Prior claims that taxing millionaires would cause them to leave other jurisdictions have turned out to be overblown.

Some observers worry that the tax is complicated and will be challenged legally and politically. A recent column by Dan Walters of CalMatters called the tax “confounding,” because of technical administrative issues and because opponents have placed opposing measures on the ballot. Proposition 40 may well be challenged in court if it passes.

But complex design and administrative issues and legal disputes describe virtually every major public policy we have — environmental, education, transportation, housing, food safety, agriculture, water use. If the standard for approving a policy is simplicity and no political controversy, that would rule out virtually everything government does. The billionaire tax shouldn’t be held to that impossible standard.

Proposition 40 is complex in significant part because billionaires have become very expert at disguising or hiding their wealth so it can’t be taxed. They hire expensive lawyers and lobbyists at the state and federal level and make huge campaign contributions, precisely to protect their enormous wealth from fair taxation.

The Nobel laureate economists’ letter points this out. They note that billionaires accounted for 19% of total federal election donations in 2024. And the letter says these donors got so rich and powerful not only because of economic innovation but also because of “our failure to tax their returns on capital.”

Gov. Gavin Newsom opposes the tax and has recently said “the fight belongs at the federal level.” In a perfect world, this would be a federal tax. But we live in an imperfect world, in which billionaires dominate political campaign spending and exercise disproportionate political and economic power. In the 2024 election cycle, Elon Musk alone contributed more than $290 million in political donations. Especially in Donald Trump’s Washington, there’s no prospect that billionaires will pay their fair share. So it’s up to the states.

In America, states lead the way in policy innovation. Precursors to Social Security, unemployment insurance and workers’ compensation, healthcare for mothers and children, and the income tax all were pioneered by state governments in the “laboratory of democracy” before federal enactment.

Although the most important reason to support the billionaire tax is the looming healthcare and economic crisis caused by Republican budget cuts, Proposition 40 also offers California the opportunity to once again lead the nation. The state led the way on environmental reform, paid family leave, and direct democracy through the ballot initiative and referendum process — the very vehicle advocates now are using for the billionaire tax.

Is the tax complicated? Yes. Will it be challenging to administer? Yes. Will it be fought bitterly by billionaires and their allies in the courts and in the political process? Yes, as we already see.

Are those reasons not to support it? No. Proposition 40 is a groundbreaking initiative that will provide significant necessary economic and healthcare assistance to California. And it will once again put the Golden State in the forefront of equitable policy favoring ordinary people, by having billionaires start to pay their fair share. Six Nobel-winning economists, healthcare workers and people who want to rein in the political power of billionaires urge you to vote for the tax. You should.

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Richard McGahey is a former assistant secretary for policy at the U.S. Department of Labor and a former executive director of the U.S. Congress Joint Economic Committee.

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