Newsom Unloads On California Wealth Tax Proposal: ‘makes No Sense’

Gavin Newsom has a blunt message to proponents of a controversial California wealth tax: I told you so.

Newsom, in an interview with POLITICO on Monday, said the parade of headlines about California billionaires preparing to flee the state vindicates his opposition to the union-backed measure.

“This is my fear,” the California governor said. “It’s just what I warned against. It’s happening.”

Newsom has been a vocal opponent of the proposal — a 5 percent tax on billionaires’ assets floated by a health care workers’ union — and he said he has been working behind the scenes for months to convince the labor group to stand down.

A likely presidential contender in 2028, Newsom said that “a national conversation” about wealth taxes could be worth having.

“That’s different. That’s very different,” he said. “We live in a competitive reality with 49 other states.”

The union championing the initiative argues it's necessary to offset the deep cuts imposed by President Donald Trump's signature tax bill, warning California will suffer massive job losses and hospital closures without an infusion of extra cash. Progressives have for years pushed a wealth tax as a way to iron out soaring economic inequality.

Proponents still need to collect nearly 900,000 signatures to qualify the proposal for the November ballot. But some of California’s wealthiest residents, including tech investor Peter Thiel and Google co-founders Larry Page and Sergey Brin, have already moved some of their businesses out of state, according to the New York Times. They fear the measure, which would apply retroactively to billionaires living in California as of Jan. 1 of this year, would result in costly tax bills if approved by voters.

Newsom, who has been an outspoken defender of California’s progressive tax system which imposes a higher burden on high-income earners, said the structure of SEIU-UHW’s measure — which would rake in one-time revenue — “makes no sense,” adding, “It’s really damaging to the state.”

“The evidence is in. The impacts are very real — not just substantive economic impacts in terms of the revenue, but start-ups, the indirect impacts of … people questioning long term-commitments, medium-term,” Newsom said. “That’s not what we need right now, at a time of so much uncertainty. Quite the contrary.”

Nor is it what Newsom envisioned focusing on in his final year as governor.

“I have a very specific agenda that I’m trying to follow, and then also [be] very pragmatic about what I don’t know — that is, all the things that come your way that are not on the agenda,” he said. “This is not how I wanted to spend my last year.”

He remarked that he had just raised more than $100 million for his redistricting ballot measure, Proposition 50, and did not seem to relish the prospect of another expensive ballot fight consuming 2026.

“The good news is the overwhelming opposition to this by others,” he said. “I think it will be defeated, because I think people understand what it does versus what it promotes to do.”

While Newsom lamented the distraction caused by the wealth tax furor, he found some of the discourse around the measure amusing.

The governor said one of the “many, many, many, many, many” discussions he had about the potential tax was with someone lamenting California’s direct democracy process, through which anyone can collect signatures to place a proposal on the ballot. The conversation was with someone who had donated a significant sum to the unsuccessful 2021 recall effort against him.

“I said, ‘That’s pretty ironic because you didn’t have any problem with direct democracy when you tried to recall me,’” Newsom said. He declined to identify the person.

Jeremy B. White contributed to this report.