Newsom Opposes Billionaire Tax After Years of Tax-and-Spend Policies

California Governor Gavin Newsom is racing to stop a proposed billionaire wealth tax from reaching the ballot this November. The irony is hard to miss. After years of embracing progressive tax-and-spend policies and treating high earners as a convenient source of revenue, Newsom now finds himself opposing a proposal that follows the same logic to its conclusion.

According to Bloomberg, Newsom has been working behind the scenes to convince supporters of the proposal to withdraw it before California’s June 25 certification deadline. The measure, backed by the healthcare workers union SEIU-UHW, would impose a one-time 5 percent tax on the net worth of California billionaires.

Newsom’s opposition underscores a reality that California Democrats are often reluctant to admit: there is a limit to how much governments can rely on a small group of wealthy taxpayers before they begin taking their investment, businesses, and tax dollars elsewhere.

If the proposal qualifies for the ballot, it could become one of the most closely watched tax fights in the country. But Newsom is not alone in opposing it. Planned Parenthood Affiliates of California, the California Teachers Association, hospital groups, and prominent Democratic donors have all expressed concerns about the measure.

A major concern is the effect the tax could have on investment, economic growth, and taxpayer migration. Entrepreneurs, investors, and business leaders have warned that the proposal is already causing residents to flee, influencing decisions about where to live and invest before the measure has even reached the ballot. A state fiscal analysis found that while the measure could generate a large one-time revenue windfall, it could also reduce long-term revenue collections if wealthy individuals leave California.

The concern is not merely theoretical. Google co-founders Larry Page and Sergey Brin, two of the world’s wealthiest individuals, have already reportedly relocated outside California. Critics argue that imposing a wealth tax would create even stronger incentives for entrepreneurs, investors, and business founders to move to lower-tax states.

California’s tax system is already heavily dependent on high-income earners, while the state continues to experience significant outmigration. The departure of even a relatively small number of wealthy residents could have an outsized impact on state finances because top earners contribute a disproportionate share of California’s income tax revenue.

The measure has also drawn criticism for relying on a volatile revenue source. Wealth taxes are tied to asset values, which can fluctuate dramatically depending on market conditions. Governments that build long-term spending commitments around temporary asset appreciation may find themselves facing budget shortfalls when markets decline.

Even some Democratic opponents argue that the proposal fails to address California’s long-term fiscal challenges. Former California Senate Majority Leader Bob Hertzberg summarized the concern by saying, “We’re not against a tax. We’re just against this one.”

With just three days remaining before the June 25 deadline, Newsom and legislative leaders are attempting to negotiate alternative healthcare funding measures that would persuade supporters to withdraw the initiative. Whether those talks succeed remains uncertain. But Newsom’s attempt to block the measure highlights the contradiction at the center of California’s fiscal policy: after years of treating wealthy taxpayers as an endless source of revenue, state leaders are now confronting the limits of that approach.