As the push for a new billionaire tax takes center stage in the Golden State, Governor Gavin Newsom continues to strongly criticize the proposed ballot initiative.
During an interview last Thursday, Newsom expressed concerns that the tax might ultimately harm the state over time.
He stated, “The reality is it will actually decrease funding for education. It will diminish investments in teachers and librarians, as well as childcare. It will also cut investments in firefighting and police services.”
Newsom clarified that the wealth tax would ultimately shrink the state’s tax base, consequently decreasing revenue designated for social services.
This statement follows public announcements by several state billionaires, including venture capitalist Peter Thiel, tech investor David Sacks, and Google co-founders Larry Page and Sergey Brin, who have indicated plans to move out of California due to the proposed tax.
Concurrently, billionaires are contributing substantial funds to a campaign opposing the ballot initiative. Thiel, for instance, made his largest political donation in years, giving $3 million to a California business organization spearheading the opposition to the billionaire wealth tax.
Newsom’s Opposition to the Tax
The 2026 Billionaire Tax Act is a proposed California ballot initiative that, if approved, would levy a one-time 5% wealth tax on residents possessing a net worth of $1 billion or greater. This tax would apply to assets like stocks, bonds, private businesses, cash, art, collectibles, and intellectual property, rather than income.
Supporters of the wealth tax argue that the measure is crucial for financing the state’s healthcare system, particularly by counteracting reductions implemented under the One Big Beautiful Bill Act. This act, according to the California Legislative Analyst’s Office, could lead to Medicare and Medicaid revenue losses ranging from $66 billion to $128 billion over the next decade.
According to the California Legislative Analyst’s Office, the tax would affect approximately 200 individuals in the state and generate $100 billion in revenue over a five-year period.
While the initiative has not yet been confirmed for the November general election ballot, a poll from Mellman Group, commissioned by Republican strategist Mike Murphy of Kensington Avenue Strategies, indicates that 48% of likely voters support it, with 38% opposed.
Since this is a direct-to-voter initiative, the California governor does not possess the power to veto it if it passes. Nevertheless, Newsom has continued to denounce the tax and encourage voters to reject it.
Newsom stated, “A one-time tax’s impact does not resolve a persistent structural issue that has been worsened by the effects of H.R. 1,” referencing the One Big Beautiful Bill Act.
A Relevant Question, But an Unsuitable Answer
However, he refrained from endorsing a national wealth tax as an alternative. Newsom commented, “That’s an interesting discussion. It’s also a difficult one.”
Without providing a definitive solution, he highlighted obstacles to implementing such a tax, including complexities in valuing specific assets. Newsom remarked, “There are significant effects concerning capital flow and market impacts, which are not minor. How do you assess market value? How do you conduct an audit?”
He further mentioned that California is addressing wealth inequality through its current tax system, which he describes as the “most progressive” in the U.S. Despite this, the governor continued to withhold his support for the billionaire tax.
Newsom concluded, “This proposal from a local SEIU chapter; I do not believe that is the solution.”