As the push for a new billionaire tax takes center stage in the Golden State, Gov. Gavin Newsom is not relenting in his criticism of the proposed ballot initiative.
In an interview with Bloomberg Businessweek last Thursday, Newsom said the tax could end up hurting the state in the long term.
“The fact is it actually will reduce investments in education,” he said. “It will reduce investments in teachers and librarians, childcare. It will reduce investments in firefighting and police.”
The wealth tax will eventually lead to a decline in the state’s tax base, which would in turn reduce revenue meant for social services, Newsom explained.
The comment comes as billionaires in the state have made public their intent to relocate elsewhere in the wake of the tax’s proposal. Venture capitalist Peter Thiel, tech investor David Sacks, and Google cofounders Larry Page and Sergey Brin have all taken steps to leave.
At the same time, billionaires are dishing out piles of cash to fund a campaign against the ballot initiative. Thiel made his biggest political contribution in years, donating $3 million to a California business group leading the fight against the billionaire wealth tax.
Newsom’s fight against the tax
The 2026 Billionaire Tax Act is a potential California ballot initiative that, if passed, would impose a one-time 5% wealth tax on residents with a net worth of $1 billion or more, targeting assets such as stocks, bonds, privately held businesses, cash deposits, art, collectibles, and intellectual property rather than income.
Proponents of the wealth tax say the bill is critical to funding the state’s health care by offsetting cuts enacted under the One Big Beautiful Bill Act, which could result in $66 billion to $128 billion in Medicare and Medicaid revenue losses within the next 10 years, according to the California Hospital Association.
The tax would impact about 200 people in the state and raise $100 billion in revenue over five years, according to a study from U.C. Berkeley.
Though it has not yet secured a spot on the November general election ballot, 48% of likely voters support the initiative while 38% are opposed, according to a recent poll from Mellman Group, which was hired by Republican strategist Mike Murphy of Kensington Avenue Strategies.
As a direct-to-voter initiative, the California governor lacks the authority to veto it should it pass. That hasn’t stopped Newsom from condemning the tax, urging voters to vote against it.
“The impact of a one-time tax does not solve an ongoing structural challenge that has been exacerbated by the impacts of H.R. 1,” Newsom said, referring to the One Big Beautiful Bill Act.
The right question, but the wrong answer
Meanwhile, he stopped short of endorsing a national wealth tax as the alternative solution. “That’s an interesting conversation,” Newsom said. “It’s a challenging one, too.”
Absent a clear answer, he noted the barriers to implementing such a tax, such as complications related to how certain assets are valued. “There’s impact as it relates to the flow of capital, the impacts on the market, which are not inconsequential,” Newsom said. “Where do you mark to market? How do you audit?”
He added that California is working against wealth inequality with its existing tax structure, which he calls the “most progressive” in the U.S. Still, the governor refused to endorse the billionaire tax.
“This proposal from one local in [Service Employees International Union]; I do not believe that’s the answer,” Newsom said.
