California Gov. Gavin Newsom (D) said he’ll vote “no” on a progressive-backed November proposal to levy a one-time tax on billionaires in the state to counter federal cuts to healthcare for low-income people.
“I understand the anxiety driving the wealth tax proposal in California,” Newsom posted on his Substack Friday, a day after the proposal officially qualified for the ballot.
“But I’m voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending,” he continued. “It ignores our public schools, as the California Teachers Association has rightly pointed out, by failing to provide sustainable funding that our communities, parents and children deserve.”
The proposal would tax the net worth of billionaires in California by 5%, allowing them to pay off the tax over five years.
Newsom argued that if the tax takes effect, billionaires will flee the state and harm California’s bottom line in the long term.
“You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do,” Newsom wrote. “Wealth is movable, and it shops for the state with the lowest taxes.”
Research shows that past state tax increases have not led wealthy residents to leave.
Newsom instead argued for a national billionaires’ tax.
“So here is what I support: A national billionaires’ tax,” Newsom wrote. “A true minimum tax on billionaires — a modern Buffett Rule — that ensures the people at the very top pay at least the tax rate their own workers pay.”
Rep. Ro Khanna (D-Calif.), a supporter of the state’s bill, dismissed Newsom’s arguments, saying voters can “sniff out propaganda.”
“The fight is now,” Khanna said on a call with reporters Friday. “It’s not going to pass muster to say, ‘Well, when we were fighting to have a billionaire tax to save the healthcare for 3 million Californians, I sided with the billionaires, but in the future I want to tax these billionaires.’ That just isn’t going to pass muster.”
Both Khanna and Newsom are rumored presidential hopefuls. This issue, Khanna said, proves what a “gulf of distance” there is between the two of them.
“It’s the difference between standing up for 3 million Californians who are losing healthcare or standing for the billionaire class,” he continued.
Petitioners for the state’s proposal collected around 875,000 signatures needed to place it on the November ballot.
Progressive politicians including Sen. Bernie Sanders (I-Vt.) have come out in support of the measure.
“The billionaire class no longer sees itself as part of American society,” Sanders said at a Los Angeles rally in February. “They’re saying there’s nothing you can do about it. Well, we’ve got some bad news for them, starting right here in California.”