itstargetnews
As the push for a new billionaire tax takes center stage in the Golden State, Governor Gavin Newsom hasn’t let up on his criticism of the proposed ballot initiative.
In an interview with Bloomberg Businessweek on Thursday, Newsom said the tax could hurt the state in the long term.
“The truth is that it actually reduces investments in education,” he said. “This will reduce investments in teachers and librarians, child care.
A wealth tax eventually leads to a reduction in the state’s tax base, which in turn reduces revenue for social services, Newsom explained.
The comment comes as the state’s billionaires have publicly announced their intention to relocate after the tax proposal. Venture capitalist Peter Thiel, tech investor David Sacks, and Google Co-founders Larry Page and Sergey Brin have all made moves to leave.
At the same time, billionaires are donating piles of money to fund the campaign against the ballot initiative. Thiel did his greatest contribution to politics over the years, donated $3 million to a California business group leading the fight against the billionaire wealth tax.
Newsom’s fight against taxes
The 2026 Billionaire Tax Act is a potential California ballot initiative that, if passed, would impose a one-time 5% wealth tax on residents with a net worth of $1 billion or more, targeting assets such as stocks, bonds, private businesses, cash deposits, art, collectibles, and intellectual property rather than income.
Proponents of the wealth tax say the bill is important to funding state health care by offsetting cuts implemented under the One Big Beautiful Bill Act, which could result in $66 billion-$128 billion in Medicare and Medicaid revenue losses over the next 10 years, according to California Hospital Association.
The tax would affect about 200 people in the state and raise $100 billion in revenue over five years, according to a study from UC Berkeley.
Although it has yet to secure a place on the ballot in November’s general election, 48% of likely voters support the initiative while 38% are against, according to a recent poll from the Mellman Group, which was hired by Republican strategist Mike Murphy of Kensington Avenue Strategies.
As a direct voter initiative, California’s governor lacks the authority to veto it if it passes. That didn’t stop Newsom from condemning the tax, urging voters to vote against it.
“The impact of a one-time tax will not solve an ongoing structural challenge exacerbated by the effects of HR 1,” Newsom said, referring to the One Big Beautiful Bill Act.
Right question, but wrong answer
Meanwhile, he stopped short of endorsing the national wealth tax as an alternative solution. “It’s an interesting conversation,” Newsom said. “It’s a challenging one too.”
Without a clear answer, he noted the obstacles to the implementation of such a tax, such as complications related to how to value certain properties. “There is an impact as it relates to the flow of capital, the impact on the market, which is not inconsequential,” Newsom said. “Where do you mark the market? How do you audit?”
He added that California is working against wealth inequality with the current tax structure, which he called “the most progressive” in the US However, the governor refused to endorse the billionaire tax.
“This proposal came from an SEIU local; I don’t believe that’s the answer,” Newsom said.
This story was originally featured on Fortune.com
