As Californians grapple with sky-high housing costs, inflation, and some of the steepest taxes in the nation, a new proposal from Assemblymember Al Muratsuchi (D–Carson) aims to push the top marginal income tax rate even higher—but only for those earning over $10 million annually.
Assembly Bill 1428, if enacted, would generate an estimated $460 million in new revenue by the 2026–2027 fiscal year, according to the Assembly Revenue and Taxation Committee. The funds would be earmarked for child care services, potentially easing the burden on working families as costs continue to climb.
Supporters say it’s a sensible step—after all, California is home to some of the wealthiest individuals in the world, thanks to Hollywood and Silicon Valley. The “tax-the-rich” mantra remains popular with many voters, especially in a state where extreme wealth and entrenched poverty exist side by side. In 2020, Senator Bernie Sanders, known for his calls to raise taxes on the wealthy, won the California Democratic primary with over two million votes—edging out then-candidate Joe Biden.
But critics warn the policy may backfire.
A report from Chapman University researchers Joel Kotkin and Marshall Toplansky points to a growing migration trend among high-income earners fleeing California for states with zero income tax—like Nevada, Texas, and Florida. If that exodus accelerates, the expected revenue may never show up.
History provides a cautionary tale. Proposition 63, passed in 2004, added a 1% surtax on Californians earning over $1 million to fund mental health services. While the idea drew strong support, follow-through was a different story. A 2017 audit by the California State Auditor found poor oversight and inconsistent spending reports. Mental health advocates criticized the state for mismanaging the funds and failing to deliver on the promises made to voters.
The bill had its first hearing in the Assembly Revenue and Taxation Committee on April 21, where it was referred to the suspense file—an indication that lawmakers are weighing its financial implications before deciding whether to move forward.
Whether AB 1428 becomes law remains to be seen. But its path forward may say as much about California’s political direction as it does about its fiscal priorities.
