California Governor Gavin Newsom announced he will vote against a one-time tax on billionaires that has qualified for the November ballot, citing concerns about its funding allocation and potential economic repercussions.
The proposal aims to levy a 5% tax on the net worth of the state's billionaires, allowing them to pay it off over five years. The revenue generated was intended to offset federal cuts to healthcare for low-income residents.
Newsom stated on his Substack that while he understands the concerns driving the wealth tax proposal, he objects to its dedication of almost all revenue to a single spending category. He highlighted the California Teachers Association's point that the measure fails to provide sustainable funding for public schools.
Additionally, Newsom expressed concern that the tax could incentivize billionaires to leave California. "Wealth is movable, and it shops for the state with the lowest taxes," he wrote. He advocated instead for a national billionaires' tax, suggesting a modern Buffett Rule that ensures top earners pay at least the same tax rate as their employees.
Supporters of the ballot measure, including Rep. Ro Khanna (D-Calif.), criticized Newsom's stance. Khanna dismissed the governor's arguments as propaganda and stated that voters would see through the position. "It's the difference between standing up for 3 million Californians who are losing healthcare or standing for the billionaire class," Khanna said.
The measure qualified for the ballot after petitioners gathered approximately 875,000 signatures. Progressive figures like Sen. Bernie Sanders (I-Vt.) have endorsed the proposal, arguing that the "billionaire class no longer sees itself as part of American society."
Research indicates that past state-level tax increases have not resulted in a significant departure of wealthy residents.