California Gov. Gavin Newsom has proposed a national "billionaires' tax" focused on establishing a federal minimum tax rate for individuals worth over $100 million. The announcement came one day after a wealth tax measure, which Newsom opposes, secured a spot on California's November ballot.
Newsom's federal proposal advocates for a return to pre-2017 corporate tax rates, closing offshore loopholes used by multinational corporations to reduce tax burdens, and revising inheritance rules. "Over the next twenty years, this country will live through the largest intergenerational wealth transfer in human history, with roughly $124 trillion changing hands," Newsom stated in a Substack post. He cautioned that without action, this transfer could "lock in a permanent American aristocracy of inherited wealth."
The California ballot measure, supported by the healthcare workers union SEIU-UHW, seeks to implement a one-time 5% tax on billionaire wealth. This state-level initiative has faced opposition from Newsom, California Democratic gubernatorial nominee Xavier Becerra, and several major lobbying groups. Newsom argued that the measure dedicates almost all of its revenue to state-funded healthcare services and stated he would vote no on the California proposal.
Newsom also expressed concerns that the state's measure could be circumvented. "Wealth is movable, and it shops for the state with the lowest taxes. The fight belongs at the federal level, where this broken system was created in the first place," he wrote. He noted that while individuals might not be able to easily relocate to avoid state taxes, billionaires possess the means to do so.
Support for the California initiative has drawn significant financial backing from wealthy individuals. The nonprofit Building a Better California, which is promoting initiatives to counter the wealth tax, has raised over $118 million, with $80 million originating from Google co-founder Sergey Brin.
Political observers, such as UC Berkeley political science professor Dan Schnur, have characterized Newsom's national tax proposal as "savvy political positioning." Schnur suggested it allows Newsom to present himself as a proponent of taxing the wealthy without endorsing the specific California ballot measure, providing him with a response for progressive Democrats.
In Washington, California Democratic Rep. Ro Khanna and Vermont independent Sen. Bernie Sanders, both supporters of the California initiative, have introduced federal legislation for an annual 5% wealth tax on billionaires nationwide.
Newsom's proposal also includes the creation of a national public equity fund, intended to provide Americans with a stake in economic gains driven by artificial intelligence. This fund would aim to assist workers impacted by automation through support for universal childcare, free higher education, career training, and healthcare. "As artificial intelligence reshapes the country, every American should own a piece of the future it builds," Newsom stated.
Other potential presidential contenders are also addressing the implications of artificial intelligence. For example, Democratic Rep. Alexandria Ocasio-Cortez has proposed federal legislation for a moratorium on AI data center construction, pending Congressional action on the economic, environmental, and safety impacts of AI.