Welcome to the January 5-9 edition of the Main Street Minute from your small-business-advocacy team in Sacramento.

No Way to Start a New Year

The final weeks of 2025 closed out with news accounts of a small group of people threatening to leave the state and move elsewhere. This would not normally be news, except for the fact that this small group were members of the highest-income Californians, who, according to the state Department of Finance, “pay the largest share of the state’s personal income tax. In 17 of 20 years through 2021, the top one percent of income earners share of total resident personal income tax liability has been greater than 40 percent.”

What has piqued their ire is an initiative currently gathering signatures for placement on the November 2026 General Election ballot that, according to the secretary of state, “Imposes one-time tax of up to 5% on taxpayers and trusts with covered assets valued over $1 billion.” The so-called 2026 Billionaires Tax Act needs 874,641 signatures to win a ballot spot and has until June 24 to get them.

So, what. This is not a small business issue … or is it?

The average NFIB member would appear to be well out of harm’s way if the Billionaires Tax Act were ever to become law. According to the 2024 NFIB Tax Survey, “Nearly three-quarters (72 percent) of small business owners reported an annual net income of less than $500,000 in 2023, with 18 percent reporting less than $50,000. Nine percent reported an annual net income of $500,000–$999,999, and 8 percent $1 million–$2.49 million. Four percent reported over $2.5 million, and another 4 percent did not know.”

No one is out of harm’s way, argues Susan Shelley of the Howard Jarvis Taxpayers Association, in this article in CalMatters. “’We tax income at a very high level, but we don’t tax wealth and assets,’ Shelley said. Nearly half of the state’s personal income tax revenue comes from just 1% of the state’s earners. Over time, she added, a wealth tax ‘could come all the way down to the middle class and they say you have too much equity in your house and we’re taking it.’”

A more immediate worry for California small businesses is how this threatened loss of income will affect NFIB’s No. 1 goal in the 2026 session of the Legislature—paying off the state’s $21 billion unemployment insurance debt to the federal government.

Select related news stories

— Fox Business— Tech billionaires threaten to flee California over proposed 5% wealth tax

— Business Insider—Read the letter celebrity lawyer Alex Spiro wrote to Gavin Newsom, warning that his clients will ‘permanently relocate’ if California wealth tax passes

— San Francisco Chronicle—Who would a California wealth tax impact? Here’s a list of the state’s billionaires

— Sacramento Bee—Will billionaires really leave California? Why wealth tax backers aren’t worried

Oh, and by the way …

… here’s another ballot initiative working its way through the signature-gathering phase. The proponent-labeled The California Education and Health Care Protection Act of 2026 “makes permanent the existing 2012 voter-approved tax rates for high-income Californians, currently set to expire in 2031. Rates apply to personal income over about $360,000 for single filers, $721,000 for joint filers, and $490,000 for heads of household,” according to the secretary of state.

What happened to just handing billionaires the tab?

Busy Year for NFIB CA PAC

Our PAC Board will be reviewing initiatives once they formally qualify for the Primary and General Election ballots to determine which ones impact small businesses the most. Board members will also vet state legislative candidates for endorsements.

Legislature Returns for 2026 Business

The California State Legislature opens its 2026 session today (January 5). Also this week, Gov. Gavin Newsom is scheduled (January 8) to give his final State-of-the-State address.

Internally, NFIB’s State Ballots go out today, and NFIB California’s Leadership Council will meet this Wednesday (January 7) to refine the legislative lobbying strategy for the year.

The NFIB Difference—You!

Whenever we can, we team up with other business groups to form a coalition in support of, or opposition to, legislation. Strength in numbers was never more necessary than in a one-party state like California, and a party under the control of its most progressive members. Add in the financial support the one party receives from well-monied labor unions and the well-heeled lawyers’ lobby and the job of getting a break for business can seem insurmountable when it’s not just plain daunting.

There are some times we must fight alone or with much-reduced coalition support given the many considerations other business groups must take into account with their memberships. Laws establishing a fast-food council with real power, requiring all businesses to have workplace violence prevention plans, and allowing the public’s business to be conducted under the veil of non-disclosure agreements are examples of issues we’ve had to fight with much-reduced support.

What we have been able to achieve in the halls of the State Capitol or at the ballot box comes from our sole strength—our members. The Power of the Small Business Voice is the most effective and influential in the nation.  That voice is spoken through our state and federal ballots and, equally importantly, through the responses to our Action Alerts we send to members during the legislative session. We’ll close with this old television ad for your amusement. Just substitute in your mind NFIB for E.F. Hutton.

Happy New Year.

National

Highlights from Federal Government Relations Principal Louis Bertolotti’s weekly report

— Federal Newswire highlighted NFIB’s support for the PERMIT Act as a key legislative priority for the 119th Congress. Adam Temple stated: “84% of NFIB members believe that the EPA should not have the authority to regulate creeks, ponds, streams, ditches, and temporary or local bodies of water. Over the last several decades small business owners have dealt with constant changes to the Clean Water Act (CWA) which has prevented them from being able to plan for the future. The PERMIT Act realigns the CWA to its original intent, which is to preserve water quality while setting clear rules for businesses so that they can plan appropriately.”

— Federal Newswire also discussed NFIB’s amicus brief in the case Flowers Foods v. Brock at the U.S. Supreme Court, quoting Small Business Legal Center Vice President and Executive Director Beth Milito: “Small businesses rely on arbitration agreements as an alternative to the costly, time-consuming legal process. If this new interpretation is upheld, thousands of small business owners could be taken to court while the legal system redefines this long-upheld standard one case at a time. Meanwhile, small businesses everywhere will be caught in the crosshairs.”

— Milito was also quoted in Small Business Trends regarding the case of Michael Pung v. Isabella County, Michigan: “Small business property owners deserve to be fairly compensated when the government seizes their property, even if that seizure is to compensate a debt to the government.”

Next Main Street Minute: January 12. All Main Streets Minutes can be found on the NFIB website here. Pull down the California tab in the upper-right-hand corner.