Newsom just doesn’t know what he’s doing, does he?
California Gov. Gavin Newsom is making an unusual appeal to voters: reject a new tax increase that targets the state’s wealthiest residents.
The Democratic governor is urging Californians to vote “No” on the California Billionaire Tax Act, a ballot initiative that would impose a one-time 5% tax on individuals with assets exceeding $1 billion. While Newsom has repeatedly supported higher taxes on the wealthy at the national level, he argues this proposal would do more harm than good for California’s economy.
The issue has quickly become one of the state’s biggest political battles heading into November, with supporters calling it a necessary step to fund public services and opponents warning it could accelerate California’s ongoing loss of businesses and investment.
Billionaire Tax Heads To California Voters
Backers of the measure officially qualified the proposal for California’s November ballot this week.
If approved, the tax would apply to Californians with more than $1 billion in assets and is projected by supporters to raise billions of dollars for healthcare, public education, and food assistance programs.
The proposal has earned support from progressive leaders, including Sen. Bernie Sanders, who has described the tax as both reasonable and necessary amid growing wealth inequality.
Newsom, however, says California is the wrong place to wage this fight.
Newsom Warns Wealth Can Leave Overnight
In a lengthy Substack post, Newsom announced he will vote against the measure.
“I’m voting no,” the governor wrote.
Newsom argued that while middle-class families generally cannot relocate simply to avoid taxes, billionaires often can.
According to the governor, wealthy investors have the flexibility to move businesses, financial assets, and investments to lower-tax states such as Texas or Florida, taking jobs and future tax revenue with them.
His warning reflects a growing concern among economists and business leaders that California’s tax burden may already be encouraging high-income residents to leave.
California Has Already Lost High-Profile Business Leaders
Newsom’s concerns come as California has seen several prominent entrepreneurs relocate businesses or establish new headquarters elsewhere.
Among the most notable names are Elon Musk, Oracle founder Larry Ellison, and Google co-founder Larry Page, all of whom have shifted significant business interests outside California.
Critics of the proposed billionaire tax argue that adding another major tax increase could encourage more investors and entrepreneurs to follow the same path.
Newsom says that would ultimately reduce economic growth rather than strengthen state finances.
Silicon Valley Entrepreneurs Raise Similar Concerns
Some technology leaders agree.
Silicon Valley entrepreneur Allison Huynh recently predicted the tax could spark a broader exodus—not just among billionaires, but also investors, startup founders, and innovators working in artificial intelligence, healthcare, robotics, and other emerging industries.
She compared the proposal to a struggling restaurant that responds to fewer customers by raising prices instead of making the business more attractive.
Her concern is that California could become less competitive as other states continue lowering taxes and reducing business regulations.
Newsom Wants Washington To Act Instead
Although Newsom opposes California’s billionaire tax, he continues to argue that America’s wealthiest citizens should pay more through federal tax reform.
After the ballot measure officially qualified, Newsom renewed his call for Congress to overhaul the nation’s tax system rather than allowing individual states to pursue separate wealth taxes.
According to the governor, the federal government is better equipped to address nationwide tax policy without encouraging wealthy residents to relocate from one state to another.
Supporters Say The Revenue Is Needed
The campaign behind the initiative, Billionaire Tax Now, insists the measure would provide desperately needed funding for California.
The coalition, backed by Service Employees International Union–United Healthcare Workers West, says the revenue would help stabilize hospitals, support K-14 public education, and strengthen food assistance programs.
Supporters remain confident voters will approve the proposal despite opposition from Newsom and many business leaders.
Critics Question Newsom’s Political Calculations
Not everyone believes Newsom’s opposition is based solely on economic concerns.
Some progressive activists argue the governor is trying to position himself for a possible 2028 presidential campaign by avoiding policies that could alienate wealthy donors.
Those critics say his decision reflects political strategy rather than economic policy.
Newsom’s office has declined to engage directly with those accusations, instead pointing reporters to his published explanation opposing the measure.
The Bottom Line
The California billionaire tax has become far more than a debate over taxes.
Supporters believe it represents a way to generate billions of dollars for public programs by asking the wealthiest Californians to contribute more.
Opponents—including Gov. Gavin Newsom—warn the proposal could drive away investment, entrepreneurs, and businesses at a time when California is already facing economic challenges.
When Californians head to the polls in November, they’ll decide not only whether to approve a new tax on billionaires, but also what direction they want the state’s economy to take in the years ahead.
