California Governor Gavin Newsom is actively campaigning against a proposed 5% wealth tax on residents worth over $1 billion, which has officially qualified for the November ballot. The measure, known as the California Billionaire Tax Act and backed by Billionaire Tax Now and the Service Employees International Union – United Healthcare Workers West, aims to fund healthcare, education, and food assistance programs. However, Newsom has voiced strong opposition, warning that the tax could trigger an exodus of wealthy individuals and businesses to states with lower tax rates, such as Texas and Florida.
Newsom articulated his stance in a Substack post, stating, "I'm voting no." He argued that while ordinary residents may not be able to relocate their income, billionaires can and do move their assets to jurisdictions with more favorable tax policies. This concern is echoed by some Silicon Valley figures, like entrepreneur Allison Huynh, who predicted a "mass migration" of not only billionaires but also investors in emerging sectors if the tax is enacted.
The proposed tax would be a one-time levy applied retroactively from January 1, 2026, to assets exceeding $1 billion. Supporters, including Senator Bernie Sanders, have endorsed the measure, calling it "reasonable and necessary" amid growing wealth inequality. Sanders has lauded the tax as a step toward addressing the consolidation of wealth.
In parallel with his opposition to the state-level tax, Newsom has also advocated for a national wealth tax, suggesting that the fight to increase taxes on the wealthiest Americans should occur at the federal level. He has described the current federal tax code as "fundamentally broken" and called for an "economic reset."
Newsom has previously cited reports of wealthy Californians moving assets and businesses out of the state as evidence of the negative economic impacts of such tax proposals. He expressed concern that these trends, which he warned of earlier in the year, are already materializing and could deter long-term investments during a period of economic uncertainty.
The proponents of the billionaire tax, Billionaire Tax Now, express confidence in its potential passage, asserting that public support is on their side. They counter that opposition stems from a desire to protect billionaires and maintain tax breaks, potentially at the expense of essential public services.
Some critics of Newsom's position suggest his opposition may be politically motivated, aimed at appealing to potential presidential donors. Newsom's office has directed inquiries about his stance to his published statements.