Newsom is drawing a line in the sand on this one. On Monday, April 27, the “2026 Billionaire Tax Act” officially cleared the signature hurdle to land on the November ballot, and the Governor isn’t hiding his frustration. He’s calling the proposal “really damaging” and “makes no sense” for a state that already leans on a handful of people to keep the lights on.
via theguardian
“Newsom’s opposition to the ballot measure – which would levy a one-time 5% tax on any residents of the state worth more than $1bn – comes amid an uproar from some of California’s most prominent billionaires. The Google founders Sergey Brin and Larry Page have both moved assets out of state in recent months, while the Palantir founder Peter Thiel donated $3m in December to a political action committee lobbying against the tax.
In interviews this week, Newsom cited billionaires who are shifting away from the state – such as Page and Brin, with whom he has longstanding relationships – as proof that his concerns about the tax deterring industry were vindicated.
“This is my fear. It’s just what I warned against,” Newsom told Politico. “It’s happening.”
The proposed ballot measure, called the 2026 Billionaire Tax Act, still needs to reach the 900,000 signatures necessary to be put to the state’s voters, but is already shaping up to become a political flashpoint this year. It is being backed by the powerful Service Employees International Union (SEIU), which argues that the revenue from the tax would save the state’s healthcare system and fund public education programs.
Newsom and his office have repeatedly spoken out against the tax, including at a New York Times Dealbook Summit event last month, when he claimed it would isolate California from the rest of the country. Newsom told Politico on Monday that there has been a months-long “all hands” effort to stop the proposal that included him personally meeting with the SEIU president.”
via AP:
““After playing with matches since October, the SEIU has succeeded in lighting a ‘Tax the Rich’ wildfire by getting enough signatures,” said David Lesperance, a tax consultant who’s advised some of his wealthy clients who left California because of the proposal. “The many billionaire targets of their efforts have already responded by executing fire escape plans by relocating to other states.”
Brian Brokaw, a longtime Newsom adviser who is leading a political committee opposing the tax, said the measure was poorly constructed and would deal a huge blow to the state’s budget.
“Enacting a so-called wealth tax in just one state wouldn’t target a small group — it would impact all 40 million Californians,” he said in a statement. “This proposal trades a short-term revenue bump for long-term losses.””
Nearly 50% of California’s personal income tax comes from the top 1% of earners. Newsom’s fear is simple: if the “Top 200” leave, the state’s $18B deficit becomes a permanent black hole.
via AP:
“A bigger concern, at least in the Capitol, is that if billionaires flee, California’s budget would take a big hit on income tax revenues. The top 1% of California taxpayers now supplies nearly half of all income tax collections. Gov. Gavin Newsom opposes the wealth tax, calling it “really damaging to the state,” saying it will “drive away affluent residents,” and promising to work to defeat it.”
Even if it passes, lawyers are already prepping to argue that taxing unrealized assets (net worth) is unconstitutional at the state level. It’s headed for years of litigation.
via Elpais:
“Under the proposal, wealth would be calculated based on assets held as of December 31, 2026, and a one-time tax of 5% would be levied. Taxpayers could pay the amount over a period of five years and, in cases of illiquid assets, defer payment until those assets are sold.
The proposal has been strongly rejected by business groups and law firms representing large fortunes. Some lawyers have warned that, if approved, the law would face constitutional challenges and lengthy litigation. Others argue that even the threat of the tax could affect the recent economic rebound in the Bay Area, driven by the boom in artificial intelligence and new technology investments.”