Newsom’s Flip Triggers Billionaire Tax Uproar

California’s governor is fighting a homegrown billionaire tax as “bad economics” while demanding Washington create a national one, sharpening fears that the rules are being written to protect the powerful, not the people footing the bill.

Story Snapshot

Gavin Newsom opposes California’s one-time 5% billionaire wealth tax but now calls for a national “billionaires tax.”
State analysts say the California tax brings a short-term cash surge, then long-term income tax losses as billionaires leave.
Health care unions say the tax is needed to replace tens of billions cut from programs by the Trump administration.
Both supporters and critics claim to defend ordinary workers, exposing deep distrust of how elites use the tax system.

Newsom’s split stance on taxing billionaires

California Governor Gavin Newsom has taken a hard line against a ballot measure that would charge a one-time 5% tax on the total wealth of state residents worth over $1 billion.^[6] Union backers say this “2026 Billionaire Tax Act” would hit roughly 200 people and raise about $100 billion over five years to shore up health care, food aid, and schools after deep federal cuts.^[6] Newsom now argues this kind of state-only wealth tax is “bad economics” and claims it is already driving some billionaires out.

At the same time, Newsom is calling on Congress to pass a national tax on the very rich.^[4] He has proposed what he calls a “true minimum tax” on anyone with a net worth above $100 million, saying billionaires should not pay lower effective tax rates than nurses, teachers, or truck drivers.^[4] He also wants to ban a common loophole that lets wealthy people borrow against stock portfolios to fund mansions and private jets while avoiding income tax.^[1] He frames this as a modern version of the “Buffett rule,” aimed at closing the gap between rich and poor.

Short-term windfall versus long-term loss

California’s nonpartisan Legislative Analyst’s Office reviewed the billionaire tax and found it would likely bring “tens of billions” in one-time revenue if passed.^[20] That sounds huge, but their report warns of a serious downside: ongoing losses of “hundreds of millions of dollars or more per year” in regular income tax as some billionaires move out to avoid the wealth hit.^[20] For a state already struggling with budget gaps and high living costs, this kind of permanent revenue hole alarms both business groups and many liberal organizations.

Newsom and his allies point to this analysis to argue that the initiative hurts the very workers it claims to protect.^[5] They say a one-time wealth grab may keep some hospitals open in the short run, but losing big taxpayers and investors could mean less money for schools, safety net programs, and basic services over the next decade.^[5] This fear of capital flight is not new; similar state-level wealth tax ideas in other states have often stalled once analysts warned of rich residents simply moving their money and homes across state lines.^[1] For many voters, this looks like proof that the current tax system favors the mobile rich over rooted middle-class families.

Health unions and progressive economists push back

The health care union behind the measure argues they are fighting a real emergency, not playing tax games.^[6] They say federal cuts under Trump’s Republican Congress blew a $100 billion hole in California’s health care and social services budgets and that without a major new funding source, hospitals will close and millions could lose care.^[6] Union leaders insist the state has few other options and that asking billionaires to pay 5% of immense fortunes built in California is a fair price to keep clinics and emergency rooms open.

Progressive economists who helped design the tax also reject the idea that billionaire flight would blow up the budget.^[7] They argue billionaires already dodge most state income tax by never selling assets, so the loss of their future payments would take decades to outweigh a large one-time wealth levy.^[7] In their view, the initiative finally taxes unrealized gains on stocks, companies, and intellectual property that have escaped fair taxation for years. They say this corrects a “broken” system where ultra-rich residents pay lower shares than the workers whose income is taxed every paycheck.^[22]

Strange alliances and deepening distrust

The fight has produced odd coalitions that confuse many regular voters. Planned Parenthood, the powerful California Teachers Association, and major hospital groups have joined business organizations and some billionaire donors to oppose the wealth tax, fearing damage to investment and long-term revenue.^[3] At the same time, the union behind the tax portrays Newsom as siding with Silicon Valley billionaires while cutting social spending to keep the budget balanced.^[7] Even some progressive activists see his stance as proof that top Democrats are too close to the donor class.

Breaking: Gavin Newsom is pushing for a nationwide tax on billionaires. He says it's about time.

— nami…💎vote垢 (@VoteNami) June 26, 2026

For people on both the right and the left, this saga confirms a nagging belief: the rules are different for the very rich. Conservatives see a union-backed tax grab that risks economic chaos instead of fixing waste and corruption in government. Liberals see a governor talking tough about fairness on national television while working behind closed doors to protect billionaires at home.^[6] Both sides watch elites trade talking points about workers and justice while everyday families face rising costs, shaky health coverage, and leaders who seem more focused on their next election than on building a tax system that is simple, stable, and fair.