Is A Billionaire Tax the Way to Save California’s Rural Hospitals?

A recent opinion article by Frank Espinosa in USA Today argues for a billionaire tax to save rural hospitals. Mr. Espinosa, a contract specialist for a hospital in California, makes a compelling argument. He reveals that rural hospitals in California are disappearing. For instance, when Glenn Medical Center closed, Glenn County lost its only hospital, leaving the closest operating hospital 40 minutes away. 

With the anticipation of $100 billion looming Medicaid cuts to California’s health system that were included in the Big Beautiful bill passed last summer, the strain on California’s rural hospitals will only increase. Because these hospitals already operate on razor-thin or negative profit margins, the additional loss of Medicaid funding will push more hospitals towards closure. Already, 16 rural hospitals in California are at risk of closure. This would limit the treatment of chronic diseases in rural populations and have economic impacts, including job losses due to illness and hospital employment. 

For this reason, Mr. Espinosa supports a one time 5% emergency tax on California’s 200 billionaires to bolster the state’s hospitals. It is an attractive idea. After all, 5% is such a relatively small sum for a billionaire whose bank accounts and investments are already overflowing. And why should they enjoy a lower tax rate than everyone else in the state? A 5% tax would mean they would pay a rate similar to everyone else.

But, there’s another viewpoint to consider. A billionaire tax risks encouraging billionaires to flee the state and relocate elsewhere. Already, Larry Page, Sergey Brin, Jeff Bezos, Peter Thiel, and Larry Ellison are among California’s billionaires who have purchased homes in Florida to avoid a billionaire tax. In NY, the loss of high-net-worth individuals has cost the city billions in tax revenue. The same will happen to California if the exodus of its billionaires continues. And the loss of tax revenue will directly threaten the state’s healthcare system, an unintended consequence. 

No one wants rural hospitals to close. They are a lifeline for rural communities, including rural women who rely on these hospitals for obstetrical care and chronic care management. But is a billionaire tax the best way to raise the funds needed to support these hospitals? It would be a very risky move, one that could further hurt the very communities the state is trying to help.