Gavin Newsom’s Race To Block A Billionaire Tax

Gavin Newsom and powerful Democratic-aligned groups are racing to kill a proposed wealth tax on California billionaires, including going to extraordinary lengths to isolate the union leader championing one of the nation'smost controversial ballot measures.

With a late-June deadline to cut a deal averting a ballot fight, Newsom’s team has turned the campaign against the one-time levy on billionaires into a show of force. In recent days, labor unions representing construction workers, carpenters, police officers and teachers, as well as prominent health care groups like Planned Parenthood, have broken with SEIU-UHW to oppose the measure, which has already driven some affluent Californians like Google co-founder Sergey Brin to relocate.

The growing coalition is tightening pressure on SEIU-UHW President Dave Regan, whose wealth-tax crusade has roiled California politics for months, to pull the measure. The message to Regan is blunt: Back down now, or risk going into a costly ballot fight increasingly alone.

“Dave Regan is seeing very plainly what he’ll be up against if he goes through with this,” said a consultant working to defeat the measure who was granted anonymity to discuss sensitive dynamics.

The union downplayed the mounting pushback, arguing it was not representative of the groups' members.

“The number of people who have privately resisted pressure to oppose the billionaire tax is far greater than the small number who have opposed it," chief of staff Suzanne Jimenez said in a statement. "There is a big gap right now between the position some organizational leaders are taking versus the needs of their constituents, but that will not stop healthcare workers from achieving solutions that fight back against the Trump cuts to patient care in California."

Newsom’s onslaught against the sponsoring union and its headstrong leader underscores the threat the governor believes the tax poses to the state’s economy and his stewardship of a government that's increasingly under scrutiny as he looks ahead to a likely presidential run in 2028. It’s also a test of the Democratic leader’s clout with a core constituency that’s being torn apart by competing tax plans that to varying degrees rely on the fortunes of California's wealthiest residents.

The level of activity is striking for an initiative that has not yet officially qualified for the November ballot, although it likely will. On Thursday, unionized carpenters joined the opposition coalition.

But the full-court press speaks to Newsom’s determination to halt the measure and the magnitude of agita within organized labor as some unions warn it will undercut their other campaigns and shrink California’s tax base. The governor’s team has been actively reaching out to powerful interest groups, encouraging them to speak out.

“The governor’s doing outreach to a lot of the unions or other folks,” said Brian Marvel, president of a law enforcement union group, the Peace Officers Research Association of California, that voted this week to oppose the measure. “We felt it was important to add our voice into the discussion to see whether it’s going to be taken off the ballot.”

It’s long been clear that billionaires will spend enormous sums to defeat the initiative. Figures like Brin and cryptocurrency mogul Chris Larsen have already spent tens of millions to attack the proposed tax and fund rival ballot measures. 

The union may not be able to match the billionaires’ spending, but it can cast the measure as a fight against the ultrawealthy. That case is harder to make if opponents can run ads urging voters to stand with teachers, cops, and construction workers and vote no.

“It starts sowing the seed of doubt,” said Sandra Lowe, a political consultant who worked on a failed 2022 tax initiative opposed by Newsom and CTA. “There’s a groundswell of people that just really want to sock it to the billionaires,” but “people trust teachers.”

The June primary delivered more bad news for proponents. Voters in deep-blue San Francisco rejected a separate union-backed tax on top earners. Progressive billionaire Tom Steyer, the only major Democratic governor candidate to endorse the statewide measure, was eliminated — depriving proponents of a top-of-the-ticket advocate.

After sinking more than $200 million into his governor bid, Steyer does not plan to spend for the wealth tax, a representative confirmed.

Regan and his lieutenants have long insisted that Newsom can’t offer an alternative that comes close to matching the windfall from the billionaire tax, which SEIU-UHW calls vital to prevent hospital closures and mass job losses from deep federal cuts. Newsom said earlier this year that the sides were at an impasse after initial talks foundered.

But Regan has a long history of filing ballot initiatives and then withdrawing them after securing deals. And the union’s tone has shifted in recent days, with chief of staff Suzanne Jimenez saying in a statement that the union was "fully open to collaborating on concrete solutions that solve the problems created by Congress."

Newsom is ratcheting up the pressure on Regan as his office oversees parallel talks around a business-backed measure to limit tax increases. That initiative’s champion, the California Business Roundtable, has denounced the wealth tax and teamed up with Larsen to combat it.

Newly declared wealth tax foes are now saying publicly what they’ve been discussing privately for months — that they fear it could cost California more than it brings in by pushing top taxpayers out of state, a risk noted by the state’s nonpartisan analyst.

That same dynamic is playing out inside organized labor, where fissures are bursting into the open. Some union leaders have privately excoriated Regan for pushing ahead with a measure that overwhelmingly benefits his members while jeopardizing teachers’ priority tax extension and spurring more billionaires into fights against union-backed legislative candidates.

“People have been consistently raising concerns — the one-time nature of the funding, where the money goes, the legality of it, the potential of losing other sources of revenue if more of the billionaires pick up and move,” said Angie Wei, a former top labor official and Newsom aide. “It’s not a surprise.”

Jimenez forcefully disputed that dissent within labor is growing, dismissing the Trades’ stance as the product of “a handful of union staff” who are “confused about the details of the way the billionaire tax works.”

“There is zero division amongst union members on this issue,” Jimenez said.

But the opposition is also cutting into SEIU-UHW’s main selling point — that the initiative would produce urgently needed money — with health care leaders arguing the initiative could hurt more than it helps, calling it an uncertain one-time fix. Planned Parenthood Affiliates of California CEO Jodi Hicks said in an interview that it threatened to distract and divert resources from the more important task of helping Democrats retake Congress, allowing them to blunt the impacts of Trump’s signature legislation.

“All of our focus should be on holding Congress accountable and flipping the House,” Hicks said. 

Countering those arguments would fall to SEIU-UHW, surrogates like Rep. Ro Khanna and Sen. Bernie Sanders, and a cluster of supportive unions that includes the Teamsters and the hospitality workers’ union Unite Here Local 11. That group’s co-president, Kurt Petersen, said in an interview that its support would not waver.

“This is the fight we want,” Petersen said. “We’re at war. People need to decide which side they’re on.”