Three separate tax proposals targeting wealthy Californians and large corporations are moving through Sacramento this year, but budget analysts warn none of them actually solve the structural problem underneath the state’s finances.
The political context driving them isn’t hard to understand. The Trump administration’s cuts to Medicare funding have put Medi-Cal, California’s health coverage program for low-income residents, in a precarious spot. Health care advocates and progressive legislators see an opening: make corporations and billionaires pay more, and use that money to backfill what Washington won’t cover. It’s a clean message. The numbers don’t cooperate.
California’s already sitting on a $22 billion budget gap. Backfilling Medi-Cal losses with new state revenue doesn’t erase a problem. It transfers one. The state would absorb spending the federal government previously handled, locking in long-term obligations that a one-time tax or corporate fee won’t sustain. That’s not a fiscal fix. That’s a bridge that ends over water.
The three measures each work differently. One targets a loophole that lets multinational corporations shield profits by routing them through out-of-state subsidiaries, avoiding California taxes in the process. A second would require employers whose workers depend on Medi-Cal to contribute to a fund replacing lost federal coverage. The third skips the legislature entirely: it’s a proposed ballot initiative that would hit billionaires with a one-time tax specifically tied to offsetting federal health care cuts.
Each has real political backing, and the momentum isn’t confined to the Capitol. The Fair Games Coalition launched what it’s calling the Overpaid CEO Tax Initiative at an event in West Hollywood on January 14, 2026, making clear this push has organizing infrastructure beyond Sacramento’s committee rooms.
Still, economists aren’t convinced any of these move the needle on the underlying budget math. A one-time billionaire tax is, by definition, not repeatable. Corporate loophole legislation produces projections that tend to fall apart once companies restructure to stay outside the threshold. And a Medi-Cal contribution mandate carries a real risk: businesses may cut workers’ hours or adjust hiring specifically to avoid triggering the requirement. You don’t collect revenue from a threshold people don’t cross.
The harder question, and the one progressives generally don’t want to answer in an election year, is whether California can stabilize its finances without revisiting Proposition 13. As CalMatters reported, some analysts see the 1978 ballot measure as the more durable problem. Prop. 13 capped property taxes at 1 percent of assessed value, and that cap has held for nearly five decades. Economists have argued for years that commercial properties sitting on assessments from 1978 or 1982, assessed at a fraction of their actual market value, represent suppressed revenue the state can’t touch.
Changing Prop. 13 is not a casual undertaking. California homeowners have treated the law as a fixed covenant since it passed. Legislators who acknowledge its revenue implications in private tend to go quiet about it publicly. The political cost of going after a measure voters passed when disco was still on the radio is one most Sacramento Democrats don’t want to absorb, especially with a federal funding fight already consuming bandwidth.
But the math keeps coming back. Assemblymember Phil Ting, who’s been involved in budget conversations around the tax proposals, was direct about the constraints. “It’s a very difficult time to introduce even further costs in taxes to middle-class Californians,” Ting said. That’s a candid acknowledgment of where the political ceiling sits, even for legislators who believe the wealthy should pay more.
What’s actually on the table in 2026 are three proposals that could bring in some money, generate a real political fight, and still leave California with a structural gap when the dust settles. Backfilling Medi-Cal buys time. It doesn’t buy solvency. The Fair Games Coalition’s initiative gives the issue a street-level presence. That matters for a ballot campaign. It doesn’t change the actuarial problem.
California’s spent four decades building a tax structure on a foundation set in 1978. The proposals moving through Sacramento this session don’t touch that foundation.