https://www.msn.com/en-us/money/other/newsom-pitches-federal-wealth-tax-after-losing-california-battle/ar-AA26zp68?ocid=msedgntp&pc=U531&cvid=7d02894dfd55409fbba107edb5486a69&ei=11Governor Gavin Newsom is calling for a federal tax on billionaires after failing to stop a California wealth tax from reaching the November ballot, setting up a high-profile test of whether voters will back one of the nation’s most aggressive efforts to tax the rich.
Newsom, who is considering a presidential run in 2028, said on Friday that he stands against the California measure, arguing that taxing billionaires should be done nationally rather than state by state. On a lengthy Substack post, he instead called for a federal tax on billionaires and those worth more than $100 million, changes to inheritance rules and closing tax loopholes on wealthy people borrowing against their assets.
Newsom didn’t propose a rate for a federal wealth tax or outline how it would work, including what exactly would be taxed. He also proposed creating a public equity fund that would take a stake in the artificial intelligence economy, though again he offered few details.
“It is time for a national billionaires’ tax,” Newsom said. “The fight belongs at the federal level, where this broken system was created in the first place.”
Federal wealth tax proposals have been championed by progressives including Elizabeth Warren and Bernie Sanders, but none advanced in Congress. The idea has long been viewed as both legally and practically challenging, not only because it’s difficult to accurately value private fortunes but also taxing wealth could could trigger constitutional challenges.
Newsom’s proposal follows a failed attempt by the governor, billionaires and progressive groups of persuading the union behind the California tax, SEIU-UHW, to withdraw the measure before Thursday evening’s deadline. Newsom had even privately expressed assurances about an agreement, telling a wealthy donor he expected to negotiate the measure off the ballot, Bloomberg News previously reported.
“For Newsom, it’s the worst of all worlds, because it puts him squarely in the middle of a national Democratic debate about equity, taxation and affordability,” said Steven Maviglio, a veteran Democratic strategist in the state. “His announcement might deflect from that a bit.”
Dave Regan, SEIU-UHW’s president, said during a press conference late Thursday that the union held “a couple of cursory conversations with the governor, but they made it clear they were not going to entertain anything that affected billionaires and we just think that’s wrong.”
The decision sets up a costly showdown at the November general election, with some of the world’s richest people willing to spend millions of dollars to stop the tax.
The anti-tax coalition stretches well beyond Silicon Valley’s billionaire class, encompassing Planned Parenthood Affiliates of California and several labor unions who argue the proceeds from the tax would benefit only certain groups, while possibly damaging the entire state’s budget by driving away wealthy residents.
A group linked to billionaire Sergey Brin is bankrolling other ballot measures that could nullify the wealth tax if one of them receives more votes. The anti-wealth tax measures will also be put before voters in November.
“We are ready to defeat this convoluted nightmare of a measure in November,” said a spokesperson for Golden State Promise, a group backed by billionaire Chris Larsen. A separate coalition linked to doctors and school boards called the tax a threat to “vital funding for education and schools, healthcare and clinics, public safety, and infrastructure projects.”
The amount set to be spent on the California wealth tax battle “will probably shatter all the records,” Maviglio said, calling it “the World War Three of politics, with the potential for a lot of collateral damage.”
The levy will also gauge the broader voter appetite for taxing extreme wealth.
A May poll from Public Policy Institute for California found the tax is supported by 54% of likely voters. More recently, San Francisco voters rejected a proposal to increase taxes on large businesses with highly-paid CEOs.
Vermont Senator Sanders and Silicon Valley Representative Ro Khanna support the measure, with Khanna saying Elon Musk’s status as the world’s first trillionaire underscores the need to tax the rich. Both have also proposed a federal tax.
“If you’re opposed to this tax, you’re on the side of trickle-down economics,” Khanna said, calling concerns about capital flight from the state “hogwash.” “You’re protecting the very, very rich as opposed to standing up for the working class.”
The tax was first floated in October as a way to backfill federal cuts to healthcare funding. The idea was to levy a one-time 5% tax on a billionaire’s net worth, from their art collection to company stock, raising as much as $100 billion.
The proposal rattled California politics and led some of the state’s wealthiest residents to say they were departing. Google co-founder Brin, the world’s third richest person, has so far spent more than $80 million to fund a group that’s supporting the anti-wealth tax ballot measures — after moving to Nevada.
Last week, the group proposing the measure tried pushing for a compromise by lowering the tax rate on billionaires from 5% to 2%. Newsom immediately rejected the offer.
“Ironically Governor Newsom is in lockstep with Donald Trump and billionaire like Peter Thiel and Sergey Brin on this issue,” Carthan said. “Governor Newsom has had seven months to put forward a solution to prevent hospitals from closing and save patient lives. But he hasn’t, because Governor Newsom has no plan.”
Dan Schnur, who teaches political communications at the University of California at Berkeley, called Newsom’s pivot to a federal wealth tax “very smart politics.”
“But it’s unlikely to become law unless or until he or another Democrat becomes president,” Schnur said. “The primary function of the proposal right now is to protect him politically, both with voters in California and in early primary states.”
Alarming for the getbigger billionaires.
I don't like these proposals. Most taxes begin with promises that they'll only target "the super rich," but they rarely stay that way. Over time they will quietly expand to cover more and more people. A wealth tax will follow the same pattern, gradually ensnaring a larger share of the public as the years go by.
Beyond the scope creep, the tax will encourage people to shift their wealth into less traceable and harder to value assets. It's relatively easy to calculate the value of publicly traded stocks. But assessing land and real estate will require surveys. Private assets like fine art, jewelry, or gold bars stored in safes are even more difficult to track and value.
In the end, this will distort behavior. People will move away from productive investments, change how they hold their assets, or even relocate abroad.
