California's governor is drawing a hard line against a new tax on billionaires, even though it may land on the ballot without him. Gavin Newsom said he has been quietly working to block a proposed one-time 5% tax on residents with more than $1 billion in assets, vowing to campaign against it if voters see it in November. "This will be defeated," he told the New York Times, arguing that just floating the idea has already encouraged some of the state's richest residents to leave, eroding future tax revenues. Newsom, who has long opposed a state wealth tax, said he would "do what I have to do to protect the state," while defending California's existing progressive income tax as fundamentally different from taxing assets.
The measure, driven by the health care union SEIU–United Healthcare Workers West, would apply retroactively to anyone who lived in California as of Jan. 1 and could be paid over five years, beginning in 2027. Supporters say the tens of billions it could raise are needed to backfill recent federal cuts to health programs and benefits, with 90% to be earmarked for health care and the rest for food aid and education. "The governor is focused on the wrong problem here," says union official Suzanne Jimenez, who argues that the real crisis is millions potentially losing access to care. The union is now trying to collect the 900,000 or so signatures needed to get the initiative on the ballot.
Newsom's challenge is that this initiative bypasses his veto power, setting up a likely showdown between labor groups and business interests. A joint review by the state's nonpartisan legislative analyst and its Department of Finance projects a large one-time windfall but warns of substantial ongoing losses if billionaires depart. The governor points to moves by Google co-founders Larry Page and Sergey Brin and investor Peter Thiel as evidence the exodus is already underway. "This is my fear," he tells Politico. "It's just what I warned against. It's happening."
Business groups are gearing up to fight the tax, calling it a threat to investment and the state budget, even as at least one tech titan—Nvidia CEO Jensen Huang—says he's "perfectly fine" paying more, per the Times. "We chose to live in Silicon Valley, and whatever taxes they would like to apply, so be it," he notes. Newsom, who suggests he might view a national wealth tax differently, says doing it in just one state leaves California competing against 49 others. CBS News has more on the proposed wealth tax and how it would work.
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