California Gov. Gavin Newsom strongly criticized a union-backed proposal to impose a one-time 5% wealth tax on billionaires, saying reports of wealthy residents leaving the state validate his warnings. He argued the levy would damage startups, undermine long-term commitments and create economic uncertainty. Supporters still need nearly 900,000 signatures to reach the November ballot, and some prominent tech figures have already moved assets out of state. Newsom said he has been urging the union to drop the measure and expects it will be defeated.
Newsom Blasts Proposed 5% Wealth Tax as 'Makes No Sense,' Warns of Exodus and Economic Harm
California Gov. Gavin Newsom delivered a blunt rebuke to backers of a proposed state wealth tax, saying recent reports of billionaires leaving California prove his warnings were prescient.
Newsom: The Tax 'Makes No Sense'
In a Monday interview with POLITICO, Newsom said the exodus of ultra-wealthy residents "is just what I warned against. It’s happening." He repeated his long-standing opposition to a union-backed proposal that would impose a one-time 5% levy on the assets of billionaires.
"It makes no sense. It’s really damaging to the state," Newsom said, arguing the measure could undermine startups, investor confidence and long-term business commitments.
What Supporters Say
The initiative, championed by SEIU-UHW (a health care workers' union), is presented as a one-time revenue source intended to offset deep cuts supporters attribute to federal tax changes. Backers say the funds would help stave off hospital closures and job losses and address stark inequality.
Practical Stakes
Proponents still must gather nearly 900,000 valid signatures to qualify for the November ballot. The proposal would apply retroactively to billionaires who were California residents as of Jan. 1 of this year — a detail that has fueled concern among wealthy individuals and prompted some to shift assets or operations out of state. The New York Times has reported relocations by figures such as Peter Thiel and Google co-founders Larry Page and Sergey Brin.
Political Context
Newsom, who has defended California’s progressive tax system, said he has spent months pressing the union behind the measure to stand down. Though he suggested a national conversation about wealth taxes might be appropriate, he emphasized the difference between a federal debate and unilateral state action: "That’s different. That’s very different. We live in a competitive reality with 49 other states."
The governor also said the initiative is an unwelcome distraction in his final year in office. He noted he recently raised more than $100 million for his redistricting measure, Proposition 50, and said he did not want another costly statewide fight to dominate 2026.
Outlook
Newsom expressed confidence the measure would be defeated, citing widespread opposition. He also recounted an ironic exchange with a donor who had backed the 2021 recall effort against him and who criticized California’s direct-democracy process — a process the donor had earlier used to challenge his governorship.
Reporting credits: Interview material cited from POLITICO; relocation reporting noted from The New York Times. Jeremy B. White contributed reporting to the original story.
Help us improve.
