Newsom Opposes California Billionaire Tax Amid 2028 Speculation

California Gov. Gavin Newsom is opposing Proposition 40, a proposed one-time tax on billionaires that would help offset federal Medicaid funding cuts, as he weighs a potential 2028 presidential campaign. The measure, which would tax the wealth of approximately 200 billionaires in California, has exposed divisions among Democrats over healthcare funding, economic policy and the influence of wealthy political donors.

Proposed by a healthcare union, Proposition 40 would impose a one-time tax of 5% on billionaires' overall wealth. Supporters say the revenue would help replace federal budget cuts to Medicaid, which provides health insurance to low-income Americans, including nearly 15 million Californians.

Newsom argues that implementing the tax at the state level could drive wealthy entrepreneurs and their businesses to states with lower tax burdens, ultimately reducing California's budget revenue. He has advocated for a national minimum tax on billionaires instead.

In a video posted to his Substack and YouTube channel in June, Newsom criticized the country's tax system and called for economic reform.

"Think about this: Just 10% of the people, 10% of the people in the country, own two-thirds of the wealth. A 30-year-old, for the first time in American history, is not doing better than his or her parents. That's a five-alarm fire," Newsom said.

He also called for a minimum tax designed to ensure that the wealthiest Americans pay at least the same tax rate as their workers.

"It's time for an economic reset, a true minimum tax. A true minimum tax on billionaires that ensures the people at the very top pay at least the tax rate their own workers pay," Newsom said.

Some progressive Democrats argue that Newsom's opposition reflects concerns about alienating wealthy donors as he considers a presidential run. Technology billionaires, including Chris Larsen, Elon Musk and Marc Andreessen, have become increasingly involved in political campaign financing in recent years.

Lorena Gonzalez, president of the California Federation of Labor Unions and a supporter of Proposition 40, criticized elected officials she believes are reluctant to challenge wealthy interests.

"There are a lot of elected officials who are so afraid of this billionaire class," Gonzalez said.

Saikat Chakrabarti, who unsuccessfully ran for Congress in San Francisco this year and serves as co-founder and president of the progressive think tank New Consensus, said Newsom's presidential ambitions could explain his opposition.

"He's made no secret of it — he's going to run for president. And that's why he's not just opposed to Prop. 40. He's vehemently campaigning against it because he needs those billionaires on his side," Chakrabarti said.

Fernando Guerra, a political science professor at Loyola Marymount University, offered a different explanation. He said opposing the measure could help Newsom appeal to centrist Democrats who may influence the party's 2028 presidential nomination.

"It defuses him being the total lefty from California," Guerra said, predicting that voters would reject the tax.

Guerra said a defeat could also give Newsom an opportunity to argue that his position reflects the electorate's preferences. The coalition opposing Proposition 40 includes the California Teachers Association and other major unions, giving the opposition political support beyond wealthy donors.

Discussing how Newsom might use a defeat politically, Guerra said the outcome could reinforce his argument that he had aligned himself with the majority of California voters.

"He's going to say, as he did with the (unsuccessful 2021 gubernatorial) recall and other things, hey, the voters have spoken, and they defeated this thing. And I was on the right side. I was on the side of the majority of the voters in California, just like I'll be on the right side with you," Guerra said.

Jim Kessler of the center-left think tank Third Way said progressive rivals might criticize Newsom during a Democratic presidential primary for opposing the tax, but those attacks could also strengthen his appeal among voters concerned about electability.

"That might help him, even in a Democratic primary, because the top issue for Democratic primary voters in presidential elections is, is this person electable? And they don't think someone overly progressive is electable," Kessler said.

Kessler also argued that California's existing tax burden could make opposition to another wealth tax politically defensible to voters.

"No one believes that California is an under-taxed state. So there isn't a belief out there that, oh, there's all sorts of tax breaks for people and wealthy people in California," Kessler said.

Chris Larsen, a billionaire who plans to support Newsom in 2028, has donated more than $12 million to oppose Proposition 40, according to the source. Speaking on KQED's Political Breakdown podcast, Larsen highlighted California's technology industry and employment growth as potential strengths for a presidential campaign.

When discussing the state's appeal to technology companies, Larsen said artificial intelligence could be an important asset for Newsom.

"You mean that he comes from the fourth largest economy in the world that's had the highest number of job growth?" Larsen said.

Larsen also pointed to California's concentration of artificial intelligence companies, contrasting the state with potential destinations such as Miami and Austin.

"They're not there. They're all here," Larsen said.

He added: "California is kicking ass."

Several prominent California Democrats, including former Vice President Kamala Harris and former House Speaker Nancy Pelosi, have avoided publicly taking a position on the measure, according to KQED. Their silence comes as labor unions and wealthy donors line up on opposing sides of the proposal.

The political and financial implications extend beyond the campaign. According to KQED, Meta recently reached a new agreement with CEO Mark Zuckerberg to keep him in California. The arrangement provides him with a new class of non-voting shares that he can sell to cover a multibillion-dollar tax bill after he warned he was considering leaving the state if Proposition 40 passes.

Polling indicates a close contest over the measure, while some billionaires appear to be preparing for the possibility that it will pass. Supporters have also intensified their criticism of Newsom, arguing that his opposition is politically motivated.