Gavin Newsom opposes one-time 5% billionaire tax, warns it could push taxpayers out of California

LOS ANGELES, CALIFORNIA: California Governor Gavin Newsom has voiced strong opposition to a proposed one-time 5% tax on billionaires, cautioning it could have unintended consequences for the state. The proposal, backed by the Service Employees International Union–United Healthcare Workers West, targets California residents with a net worth exceeding $1 billion.

Newsom argued that the tax might drive wealthy residents out of California, shrinking the state’s tax base and ultimately reducing funding for essential services like education, public safety, and healthcare.

Gavin Newsom expresses concern over California’s tax structure

“California has the most progressive tax structure in the United States. That said, I fear the way this has been drafted,” Newsom said at a Bloomberg News event in San Francisco on January 29.

He added, “The fact is, it actually will reduce investments in education. It will reduce investments in teachers, librarians, and childcare. It will reduce investments in firefighting and police.”

“The impact of a one-time tax does not solve an ongoing structural challenge that has been exacerbated by the impacts of H.R. 1,” he continued.

The initiative has not yet qualified for the November 2026 ballot. According to the Legislative Analyst’s Office, the tax would be due in 2027, with taxpayers able to spread payments over five years, though additional costs would apply.

Gavin Newsom warns taxpayers could leave over time

Newsom emphasized that while the tax would provide a short-term boost, over the long term, it could reduce revenue as billionaires move out of the state. “There's impact as it relates to the flow of capital, the impacts on the market, which are not inconsequential,” he said.

Trevor Foreman, an SEIU member and hospital security officer, countered the governor’s argument, saying, “California’s billionaires pay much lower tax rates than working families. Federal health care cuts in 2026 will collapse key parts of the healthcare system.”

Governor highlights anxiety among California’s billionaires

When asked about his interactions with the state’s 200 billionaires, Newsom said, “There's some extraordinarily enlightened people in that category, and some who put a mask on.”

He noted that anxiety among wealthy Californians has prompted additional health care expansions, aiming to ease pressure on Medicaid and offset stress. “But I do think this is unfortunate, and we'll continue to make a case for alternatives,” he added.