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WESTSIDE - Days after the June 2nd Primary, California Governor Gavin Newsom (D) went on the record with a host of other statewide Democrats opposing a wealth tax, describing it as "damaging to the state," referencing a prior interview with POLITICO on January 12th of this year.
A mailer was distributed on the topic by Golden State Promise.
Golden State Promise is a political action committee (PAC) formed to oppose California's proposed "Billionaire Tax" ballot measure. The committee is funded primarily by tech executives and figures tied to the cryptocurrency industry, including a combined $10 million contribution from Ripple Labs and its CEO, Chris Larsen.
In an interview with BLOOMBERG, Newsom described the initiative in the following manner:
"The fact is it actually will reduce investments in education. It will reduce investment in teachers and librarians, and childcare. It will reduce investments in firefighting and police. You should see a significant reduction in taxes because taxpayers will move."
A wealth tax is a tax on a person's net worth—the value of all assets (stocks, businesses, real estate, art, etc.) minus debts. Unlike an income tax, which taxes what you earn each year, a wealth tax taxes what you own.
The current California proposal and Governor Newsom's new federal proposal differ in several ways.
For what is California's proposed wealth tax?
The initiative that qualified for California's November 2026 ballot would:
- Impose a one-time 5% tax on the net worth of California residents worth more than $1 billion as of January 1, 2026.
- Raise an estimated $100 billion over five years, according to proponents.
- Dedicate most of the revenue to healthcare, with smaller amounts for education and food assistance.
And Why does Newsom and several other leading Democrats including former CA Attorney General and gubernatorial nominee Xavier Becerra oppose the California version?
Newsom has given several reasons:
1. Wealth is mobile for those of financial affluence.
His principal argument is that billionaires can simply change their residence to another state such as Texas or Florida, reducing California's future tax base.
The outgoing governor and probable presidential hopeful see things in this regard:
"A state can lose wealthy taxpayers; the federal government cannot lose them to another state."
For this is the argument Newsom now emphasizes as he enters his lame duck status as governor. An argument he emphasizes most.
2. It's a one-time only tax.
Newsom argues that a "single payment" produces a temporary revenue windfall while potentially causing permanent losses if wealthy residents relocate. And California has witnessed a large degree of population flight to states such as Texas, Nevada and Idaho.
California saw its first-ever year-over-year population decline in state history.
Between April 2020 and July 2022, the state lost roughly 500,000 residents. The state reversed the downward trend, gaining 67,000 residents in 2023 and growing by 108,000 people in 2024 (reaching approximately 39.5 million residents). But After the brief recovery, the state's population dipped again, falling by around 54,000 people to sit just under 39.6 million currently.
3. The money is narrowly earmarked.
Newsom criticized the initiative because most of its proceeds are reserved for healthcare rather than allowing the state Legislature to allocate funds across multiple priorities.
So Why does Newsom now support a national wealth tax?
He argues that a federal tax instead avoids many of these challenges that any state would face.
Here is a more in-depth view of his most recent, national proposal:
- A minimum tax on individual worth over $100 million.
- Closing federal loopholes that allow wealthy individuals to borrow against appreciated assets tax-free.
- Inheritance Tax reform.
- Higher corporate taxes.
- An AI-related public investment fund.
Newson's reasoning seems practical, while eyeing a run for the Democratic nomination in 2028 since wealthy Americans cannot avoid a federal tax simply by moving from California to Nevada or Texas. A nationwide tax system reduces interstate considerations, and the federal government has broader constitutional authority to administer national taxes.
Based on the ballot proposal and Newsom's new offering, the number of individuals impacted does vary. With the California ballot measure, roughly 200 to 220 California billionaires would be subject to the tax, according to current estimates. California has more billionaires than any other state.
Newsom's national wealth tax is far broader and wider as he has suggested a threshold of $100 million in net worth, not $1 billion. That would affect thousands of Americans rather than only a few hundred Californians, though Newsom has not released an actual estimate of the number of taxpayers covered.
With affordability in the national discussion, Newsom's new proposal is indeed controversial and lacks any serious bipartisan support from the other side of the aisle. Among Democrats, and specifically progressives, the idea is powerful with socialists like Vermont Senator Bernie Sanders while many moderates are either skeptical or opposed, at least with respect to the state's ballot measure.
Republican elected officials overwhelmingly oppose wealth taxes, arguing they discourage investment, are difficult to administer, and would face constitutional scrutiny.
But the debate will rage here in California and ultimately in 2028 as a Democratic idea in the presidential primaries. Do Democrats like Newsom see this as a way to bring progressive support to his cause, that seems more bicoastal than actually addressing the needs of the necessary "swing states" to get to the magic number of 270 Electoral votes?
At the end of the say, is taxing the "Uber" wealthy a winner?
While wealth inequality has reached historically high levels, many billionaires pay relatively low effective tax rates because much of their wealth comes from unrealized investment gains. Does taxing extreme wealth generate revenue for public services at the federal level like Social Security or other entitlements?
A state only wealth tax offers the escape hatch of relocating or restructure assets, while valuing privately held businesses and other illiquid assets is at least complex, and such taxes could reduce investment and entrepreneurship, while triggering potential litigation at the state level.
In short, Newsom's high wire tight walk is that all wealth taxes are not bad.
Rather, he argues that a state-level wealth tax is economically self-defeating because wealthy residents can leave, while a federal wealth tax would be more difficult to avoid and therefore more effective in these times where average Americans lack the resources to keep up and maintain a quality of life, especially in a high-tax state like California.
For is the national wealth tax really about Newsom running for president in 2028?
For how can you oppose one version versus the entire concept?
It's certainly reasonable to view this through the lens of a possible 2028 presidential campaign, but it's not the only plausible explanation. Both politics and policy are likely at work.
There are two ways to interpret Newsom's position. Newsom's stated rationale is internally consistent, even if some disagree with it.
A California-only wealth tax encourages the wealthiest residents to move to states with lower taxes, such as Texas, Nevada, or Florida. Which has been happening for over a decade. A federal wealth tax would apply nationwide, so moving from one state to another would not avoid the tax. Therefore, if you're going to tax wealth, the federal government is the more effective level of government to do it, no matter how unpopular with most members of congress regardless of party affiliation.
Ironically many economists—both liberal and conservative—have made similar arguments over the years. They may disagree about whether a federal wealth tax is a good idea, but many agree that state-level wealth taxes face much greater challenges because people and capital are diversified and mobile.
And critics argue that the timing is difficult to separate from Newsom's national ambitions.
He's widely viewed as a likely 2028 presidential candidate. He unveiled his national proposal just as California's billionaire tax officially qualified for the November ballot. A national wealth tax is popular with many Democratic primary voters, while opposing California's measure reassures business leaders and Silicon Valley donors worried about state competitiveness.
This allows Newsom to tell two different audiences two different stories.
To progressive Democrats: "I support taxing extreme wealth." To the business community and moderates: "I won't support policies that I think damage California's economy."
Whether that's principled pragmatism or raw political positioning depends on one's perspective.
The criticism of Newsom isn't simply that he distinguishes between state and federal taxes. Rather, it's that he chose this moment—when a California measure, he opposes is headed to voters—to embrace a broader federal version.
Is the federal proposal likely to become law?
Under the current political landscape, its chances appear to be zero with Trump in the White House.
A federal wealth tax would face strong Republican opposition, acute skepticism from some moderate Democrats, as well as likely constitutional challenges, to say nothing of significant legislative hurdles in Congress.
Most political observers believe Newsom's position is influenced by his likely 2028 presidential aspirations. At the same time, there is a policy distinction between a state's wealth tax and a federal one. The debate is less about whether the distinction exists and more about whether Newsom genuinely believes it is decisive or whether he is just emphasizing it because it also aligns with his national political ambitions that need a shot in the arm in what will be a very crowded field of hopefuls, especially if Democrats take back the House, Senate or both.
(Nick Antonicello is a thirty-three-year resident of the Westside who covers municipal, county, state and federal campaigns, policies and proposals. A contributing writer to City Watch LA, he can be reached via e-mail at [email protected])
