Gov. Gavin Newsom (D-CA) has vowed to use his political power to stop a proposed 5% wealth tax on billionaires, even if that means going against his own party and angering unions in the process.
The healthcare workers’ union that has been pushing the measure claims it is necessary to offset the cuts caused by President Donald Trump’s tax bill and argues that hospital closures and job losses could be on the horizon if the state doesn’t see a massive infusion of cash. Supporters still need nearly 900,000 signatures to place the proposal on the November ballot.
Newsom is facing a multibillion-dollar deficit in his last year in office. He has claimed that even the introduction of a wealth tax has driven billionaires to relocate and take their sizable tax dollars with them. The outgoing governor, who is eyeing a 2028 presidential run, said he has been working behind the scenes to prevent a wealth tax from being implemented. He told the New York Times that if the measure were to make it onto the November ballot, he would fight it.
“This will be defeated,” he said. “There’s no question in my mind. I’ll do what I have to do to protect the state.”
While Newsom has said there is room for a national conversation on wealth taxes, he does not believe one would benefit California anytime in the near future. “We live in a competitive reality with 49 other states,” he said.
Despite long opposing a wealth tax, Republicans and tech influencers have tried to pin support of one on Newsom.
The proposal itself calls for California residents with more than $1 billion in assets to pay a one-time tax equal to 5% of their assets. For example, someone with $1 billion in assets would be required to pay $50 million in taxes over five years.
While some, such as Nvidia CEO Jensen Huang, said they would be “perfectly fine” with paying the tax, others, such as Democratic donor Reid Hoffman, slammed it as “horrible for innovation.” Hoffman seems to be in the majority. More than half a dozen billionaires have left or are planning to leave the state. Venture capitalist and GOP mega-donor Peter Thiel, as well as Google co-founders Larry Page and Sergey Brin, the world’s second- and third-richest men, respectively, have already taken steps to cut ties with California. Page, 52, has moved many of his business interests out of the state, including his family office. He recently paid $173.4 million for two homes in Florida.
According to data from Forbes and Americans For Tax Fairness, there were about 215 billionaires living in California at the start of the new year. Over the past 12 months, their collective wealth has gone up by 30% to $2.2 trillion.
The union pushing the tax, the Service Employees International Union-United Healthcare Workers West, has estimated it could raise $100 billion in revenue and help offset federal cuts to health spending, including reductions in Medicaid, Affordable Care Act subsidies, and food assistance.
Suzanne Jimenez, the union’s chief of staff, says the proposal calls on the state to spend 90% of the accrued taxes on healthcare and 10% on food assistance and education.
“The governor is focused on the wrong problem here,” she said. “The problem is not just about the preferences of 200 ultrawealthy individuals. The problem is millions will lose healthcare, and that’s really the problem we’re trying to solve.”
Rep. Ro Khanna (D-CA) signaled his support for the proposed tax on social media.
“My district is $18 trillion, nearly 1/3 of US stock market in a 50 mile radius,” he said in a lengthy post. “We have 5 companies with a market cap over a trillion dollar companies. If I can stand up for a billionaire tax, this is not a hard position for 434 other members or 100 Senators.”
BELTWAY CONFIDENTIAL: CALIFORNIA’S BROKE, BUT NEWSOM WANTS TO SPEND EVEN MORE
Newsom, who spent much of last year raising more than $100 million for Proposition 50, a redistricting ballot measure aimed at stacking the deck in favor of Democrats during the midterm election, told Politico that he has “a very specific agenda that I’m trying to follow, and then also [be] very pragmatic about what I don’t know — that is, all the things that come your way that are not on the agenda.”
“This is not how I wanted to spend my last year,” he added.
