Sen. Bernie Sanders is campaigning in Los Angeles for a proposed one-time 5% tax on billionaires' net assets, a plan backed by a large health care union to offset recent federal health funding cuts. Gov. Gavin Newsom has emerged as a vocal opponent, warning the measure could harm California's finances and competitiveness. The proposal is creating a public split in the Democratic Party, reshaping gubernatorial races and drawing millions in political spending as supporters try to collect more than 870,000 signatures to reach the November ballot.
Sanders and Newsom Clash Over Proposed 5% Billionaire Wealth Tax — Democrats Split Ahead of Midterms
FILE - U.S. Sen. Bernie Sanders, I-Vt., speaks during Mayor Zohran Mamdani's inauguration ceremony, Jan. 1, 2026, in New York. (AP Photo/Andres Kudacki, File)(ASSOCIATED PRESS)
As Democrats nationwide look for a unifying message ahead of this fall's midterm elections, a proposed one-time 5% tax on billionaires' net assets in California has opened a rare public rift within the party.
What’s At Stake
Sen. Bernie Sanders is scheduled to campaign in Los Angeles in support of the measure, which has drawn fierce opposition from Gov. Gavin Newsom and alarm from Silicon Valley leaders. Backed by a large health care union, the proposal would levy a one-time 5% tax on the assets of individuals worth $1 billion or more — including stocks, privately held businesses, artwork, collectibles and intellectual property — with supporters saying the revenue would replace federal funding cuts to health services enacted under the Trump administration last year.
Political Fallout
The measure has put prominent Democrats on opposite sides. Sanders called the proposal a timely response to growing wealth and income inequality, writing on X that he strongly supports the tax “at a time of unprecedented and growing wealth and income inequality” and adding, “Our nation will not thrive when so few own so much.”
“It is always better for a party to have the political debate focused on issues where you are united,” said Eric Schickler, a political science professor at UC Berkeley, noting that divergent positions from leaders like Newsom and Sanders are politically awkward for Democrats ahead of the midterms.
Newsom and his advisers argue the tax would threaten California’s fiscal stability and economic competitiveness. Brian Brokaw, a longtime Newsom adviser leading a committee opposed to the measure, said affordability, health care costs and school funding would not be solved — and could be made worse — by this one-time levy.
FILE - California Gov. Gavin Newsom speaks during a rally with Harris County Democrats at the IBEW local 716 union hall Nov. 8, 2025, in Houston. (AP Photo/Karen Warren, File)(ASSOCIATED PRESS)
Down-Ballot Effects And Campaign Spending
The debate is already influencing the governor’s race and other contests. Republican gubernatorial candidates Chad Bianco and Steve Hilton have warned the tax would cost jobs, while Democratic contender and San Jose Mayor Matt Mahan says inequality is rooted at the federal level and points to loopholes in the federal tax code.
Opponents and supporters have funneled millions into political committees and are deploying targeted emails and social ads to sway party insiders ahead of a state Democratic convention and Sanders’ visit. Supporters must gather more than 870,000 valid petition signatures to place the measure on the November ballot, and the outcome remains uncertain.
Economic Concerns And Arguments
Analysts warn that a potential exodus of billionaires could reduce state tax revenues by hundreds of millions of dollars; proponents counter that the funding is critical to offset federal cuts that could otherwise leave many Californians without essential health services.
As the contest unfolds, it highlights broader tensions in the Democratic coalition: progressive demands for aggressive redistribution and reforms versus pragmatic concerns about economic competitiveness and electoral strategy.
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