California Governor Gavin Newsom has come under criticism from multiple directions after failing to prevent the California Billionaires Tax Act from reaching the November ballot, despite publicly stating he would work to keep the measure off the ballot.
"This will be defeated. There's no question in my mind," Newsom told the New York Times on Monday. "I'll do what I have to do to protect the state."
By Friday, the measure had secured a place on the November ballot, prompting Newsom to publish a Substack post outlining his position against the state-level tax while expressing support for a national billionaire tax.
"The fight to make the wealthiest Americans pay more in taxes is not one we should be fighting state by state," Newsom wrote. "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. Wealth is moveable, and it shops for the state with the lowest taxes." He added: "The fight belongs at the federal level, where this broken system was created in the first place."
What the Right Is Saying
Tech industry figures and fiscal conservatives have criticized Newsom from a different angle. David Sacks, a California resident who served as a senior advisor on artificial intelligence in the Trump administration, accused Newsom of aligning with progressive forces after initially signaling he would protect the tech industry.
"Today was the day that Gavin Newsom was supposed to save the tech industry by cutting a deal to kill the Billionaire Tax Act," Sacks wrote. "Instead he came out as Democratic-Socialists of America adjacent, and the Billionaire Tax Act will be on the ballot in November." The venture capitalist added: "See y'all in Texas!"
Fiscal conservatives argue that even if billionaires do not physically relocate, wealth can be restructured to minimize California tax exposure. They contend that a 5% one-time net worth levy creates legal uncertainty and could prompt challenges under the Federal Constitution's commerce clause protections against discriminatory state taxation.
Business groups have warned that the measure signals hostility toward wealth creation and could discourage high-net-worth individuals from basing operations in California. Republican lawmakers have argued that the tax would ultimately harm middle-class workers through reduced investment and job losses if successful.
What the Left Is Saying
Progressive supporters of the California Billionaires Tax Act have criticized Newsom's position as inconsistent and politically motivated. Social media commentator Matt Bernstein wrote that Newsom is "kind of the politician of all time" who "changes his view three times a week, transforms himself to please whoever he's speaking to."
The Service Employees International Union-United Healthcare Workers West (SEIU-UHW), which backs the measure, argues that 90% of revenue raised would offset healthcare cuts signed into law by President Trump. The union has positioned the tax as addressing both income inequality and healthcare funding gaps.
Progressive advocates contend that a state-level approach is necessary given federal inaction on wealth taxation. They note that billionaires have accumulated trillions in untaxed appreciation while working-class Americans face rising costs. Some progressive groups argue Newsom's call for federal action amounts to deferring a solution indefinitely, pointing to the decades-long failure of Congress to pass significant wealth taxes.
The California Teachers Association has also weighed in, arguing the measure fails to provide sustainable funding for public schools and relies too heavily on dedicating revenue to healthcare at the expense of education.
What the Numbers Show
Analysis from California's Department of Finance, cited in coverage of the debate, found that a state billionaire tax could generate tens of billions of dollars for the state, but warned it could result in hundreds of millions in continuing economic losses if billionaires relocate or restructure their holdings.
The California Billionaires Tax Act would impose a one-time levy equal to 5% of a billionaire's net worth. The payment would be spread over five years at an annual rate of 1%, making the total effective tax burden $50,000 per $1 million in net assets above the billionaire threshold.
To qualify as subject to the tax, an individual would need California residency and net assets exceeding $1 billion. Tax experts have noted that valuation disputes for illiquid assets like private company equity could create significant litigation.
California's Legislative Analyst's Office has previously estimated that similar wealth tax proposals in other states generated significantly less revenue than proponents projected due to behavioral responses by affected taxpayers.
The Bottom Line
The California Billionaires Tax Act represents one of the most aggressive state-level attempts to impose net worth taxes on ultra-wealthy residents. Its placement on the November ballot sets up a high-profile test of whether California voters support targeted taxation of billionaire wealth or share concerns about economic migration.
A national billionaire tax would face significant political hurdles even with Democratic control of Congress, given bipartisan skepticism from members representing states with wealthy constituencies. Analysts note that any federal proposal would need to address constitutional questions about residency-based taxation of floating assets.
The outcome could influence similar proposals in New York and other high-tax states. If the California measure passes, expect legal challenges arguing it violates equal protection by imposing different tax burdens based on wealth level, and commerce clause protections for non-California income sources.