Tom Steyer Rails Against Plutocrats. His Firm Has Cayman Islands-based Funds.

Tom Steyer is running for California governor as an enemy of tax-avoiding plutocrats.

"Tax me more," the billionaire environmentalist said recently on X. "I've been saying it for a long time."

It's a major part of Steyer’s effort to position himself as a populist. It's also a reminder of a familiar Achilles' heel: Steyer, who says he wants to pay more in taxes, still benefits from low-tax policies when it comes to his own business interests.

His investment firm, Galvanize Climate Solutions, has some $6.8 billion under management. About $1 million of that is in two Cayman Islands-based funds, according to a Dec. 1 filing with the Securities and Exchange Commission.

Steyer said in an interview that the two funds — one a hedge fund, the other a venture capital fund — were for foreign investors.

"I am not engaging in tax avoidance at the same time that I'm yelling, 'Billionaires should be paying more taxes,'" he said. "Are we setting up stuff for Americans to avoid taxes, or Californians? No. Are we setting up something so that people from around the world can have a place to be domiciled and to invest through us? Yes."

Steyer's moneymaking ventures have come under scrutiny since he began funding Democratic campaigns and ballot initiatives a decade ago, including his previous firm's investments in tobacco companies and private prisons. During his presidential run in 2020, he drew questions about whether his background qualified him to address concerns about wealth inequality.

The longtime hedge fund owner, Democratic donor and failed presidential candidate entered California's crowded gubernatorial race with his most aggressive positioning yet as a champion of business reform and affordability concerns. After largely focusing on climate change in earlier electoral forays, he's emphasizing kitchen-sink issues in his first run for elected office in California and pledging to reduce utility bills by breaking up the state's dominant power providers.

But if Steyer wants to tax the rich, it’s his money that is allowing him to spread that message. Steyer has put $20 million into the race, coming out early with ads targeting Northern California utility Pacific Gas & Electric. With polls consistently showing a plurality of voters undecided, his task will be to boost his profile relative to statewide figures like former Rep. Katie Porter (D-Calif.), former Biden health secretary Xavier Becerra and Rep. Eric Swalwell (D-Calif.) — as well as Republicans like Chad Bianco and Steve Hilton who could emerge victorious from the state's "jungle" primary.

Steyer announced a leave of absence from Galvanize, which he co-founded in 2021, when he launched his gubernatorial campaign. He remains invested in the firm, campaign spokesperson Kevin Liao said.

His previous investment firm, Farallon Capital, which he left in 2012, also had offshore holdings, as did his personal investments, which he disclosed during his presidential run. Steyer said at the time that he was simply following U.S. tax laws although he disagreed with them.

"Farallon did tax planning for its clients according to the laws of the United States of America," he told the New York Times. "Do I agree with those laws? No. You can take a look at my taxes and see what I do. Do I think that’s the way it should be? No. Those are the laws of the United States. Do I think they should be changed? Sure, I do."

In a crowded field with no clear frontrunner and several other potential candidates still on the sidelines, including Los Angeles developer Rick Caruso and San Jose Mayor Matt Mahan, Steyer's attacks on the status quo in deep-blue California set him apart from other Democrats. He's called out state utility regulators for approving investor-friendly rate structures, an implicit dig at Gov. Gavin Newsom, who appointed them.

"That messaging usually doesn't resonate with Democratic primary voters for the most part, because they're not the ones who want to burn the place down," said Andrew Acosta, a Democratic political consultant. "That's the Republican lane."

Other self-funded candidates have struggled to break through in California, from Al Checchi in 1998 to Meg Whitman in 2010 to Caruso, who ran for Los Angeles mayor in 2022.

Steyer, who began getting his name in front of viewers in the fall through ads endorsing Proposition 50, Newsom's successful bid to redraw the state's congressional districts to favor Democrats, also has another lane open to him as an anti-Trump candidate, alongside Swalwell.

Steyer said his priorities are to address rising rents and housing availability.

"Rent is the number one thing that's on everybody's mind: rent, and the ability to buy a home," he said.

This reporting first appeared in California Playbook. Sign up to receive it in your inbox every weekday.