California Governor Gavin Newsom has announced he will vote against a November ballot measure that would impose a one-time tax on billionaires to offset federal cuts to healthcare for low-income residents. The proposal, which officially qualified for the ballot, would levy a 5% tax on the net worth of California billionaires, payable over five years.
Newsom's Rationale
In a Substack post on Friday, Newsom acknowledged the anxiety driving the wealth tax proposal but explained his opposition. 'I'm voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending,' he wrote. 'It ignores our public schools, as the California Teachers Association has rightly pointed out, by failing to provide sustainable funding that our communities, parents and children deserve.'
Newsom also argued that the tax would drive billionaires out of the state, harming California's long-term economic health. 'You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do,' he stated. 'Wealth is movable, and it shops for the state with the lowest taxes.' However, research indicates that past state tax increases have not led to an exodus of wealthy residents.
Alternative Proposal
Instead of a state-level tax, Newsom advocated for a national billionaires' tax. 'So here is what I support: A national billionaires' tax,' he wrote. 'A true minimum tax on billionaires — a modern Buffett Rule — that ensures the people at the very top pay at least the tax rate their own workers pay.'
Supporters Push Back
Representative Ro Khanna, a Democrat from California and supporter of the state measure, dismissed Newsom's arguments, accusing him of siding with billionaires. 'The fight is now,' Khanna said on a call with reporters. 'It's not going to pass muster to say, “Well, when we were fighting to have a billionaire tax to save the healthcare for 3 million Californians, I sided with the billionaires, but in the future I want to tax these billionaires.” That just isn't going to pass muster.'
Both Khanna and Newsom are considered potential presidential candidates. Khanna described the issue as revealing a 'gulf of distance' between them. 'It's the difference between standing up for 3 million Californians who are losing healthcare or standing for the billionaire class,' he added.
Progressive Support
The petition for the proposal gathered approximately 875,000 signatures to secure a spot on the November ballot. Progressive figures, including Senator Bernie Sanders, have endorsed the measure. 'The billionaire class no longer sees itself as part of American society,' Sanders said at a Los Angeles rally in February. 'They're saying there's nothing you can do about it. Well, we've got some bad news for them, starting right here in California.'
