Newsom vs. California’s Billionaire Tax: Who’s Funding the Fight to Kill It?

California’s billionaire tax fight is now headed straight to the voters, exposing how both parties and their donors helped create a crisis they now claim they cannot fix.

Story Snapshot

California’s one-time 5% billionaire tax has qualified for the November ballot, despite Governor Gavin Newsom’s efforts to stop it.
The measure targets about 200 billionaires and could raise up to $100 billion for healthcare, schools, and food aid, but critics warn it may drive wealth out of the state.^[12]
Democrats and labor unions are split, revealing a deep rift between ordinary workers and political leaders tied to big donors.^[8]
Both supporters and opponents admit the fight is about more than money; it is about who really runs the state and who pays when Washington cuts safety‑net programs.^[7]

How The Billionaire Tax Landed On The Ballot

Healthcare workers and allied unions spent months gathering signatures for the 2026 Billionaire Tax Act, a one-time wealth tax aimed at California’s richest residents.^[4] The initiative would impose a 5% tax on the net worth of people whose wealth exceeds $1 billion, hitting roughly 200 billionaires in the state.^[12] Supporters say this would raise about $100 billion, with 90% reserved for healthcare and the rest for schools and food assistance, to offset federal Medicaid cuts from Trump-backed legislation.^[8] The secretary of state’s office has now certified that the petition passed the threshold, meaning voters, not politicians, will decide the measure this November.^[12]

Backers frame the tax as a one-time reset of the social contract, not an annual raid on wealth.^[3] They argue that billionaires built fortunes using California’s roads, universities, and tech ecosystem, while many working families struggle with medical bills and rising costs.^[8] The tax would apply to anyone who was a California resident as of January 1, 2026, even if they later leave the state, which supporters say is needed so billionaires cannot simply flee to dodge the bill.^[4] Billionaires could pay in installments over five years, easing cash flow but still forcing a serious transfer of wealth from the top toward public services.^[12]

Why Gavin Newsom Tried And Failed To Stop It

Governor Gavin Newsom has blasted the billionaire tax from the start, calling it a plan that “makes no sense” and warning that it will be defeated if it reaches voters.^[1] He argues that the measure would destabilize California’s already volatile tax base by pushing high‑net‑worth residents, and their future tax payments, out of the state.^[2] Newsom has also claimed the tax could hurt funding for firefighters and teachers by reshaping revenue flows without fixing deeper budget problems caused by years of overspending and boom‑and‑bust tax cycles.^[10] Because this is a direct ballot initiative, he cannot veto it, so his team tried to broker a smaller compromise, reportedly a lower 2% tax, if unions would pull the 5% measure.^[10]

That effort collapsed when the unions refused to back down, and the deadline to keep the initiative off the ballot passed.^[9] Newsom’s loud opposition has opened a major fissure inside the Democratic Party, where many rank‑and‑file members are tired of seeing leaders protect billionaire donors while asking ordinary people to accept cuts.^[6] Tech leaders and wealthy Californians, some of whom back Newsom’s rumored 2028 presidential ambitions, are pouring money into the campaign to defeat the tax, raising questions about whose interests are really driving the governor’s stance.^[6] For voters who already feel the “deep state” serves the rich first, the optics are hard to ignore.

Labor And Democrats Split Over Who Should Pay

One striking twist is that not all unions support the billionaire tax. While the health care workers union SEIU‑UHW and groups like the California Democratic Socialists of America back the measure, some powerful labor organizations, including the California Teachers Association and Planned Parenthood, have come out against it.^[8] These groups argue the tax is too narrow because it sends almost all the money to healthcare rather than spreading funds across schools and other services, and they worry about a one‑time windfall that does not provide stable, long‑term revenue.^[8] Their stance shows that even inside the left, there is fear that poorly designed taxes can backfire on public programs.

Opponents across the spectrum also highlight the tax’s retroactive design as a legal risk. The measure taxes people who were residents on January 1, 2026, even if they move later, raising due‑process and constitutional questions that could spark court battles and delay funds.^[12] Business leaders warn that billionaires are already considering or starting to relocate, though there is no independent, audited data yet proving large numbers have left solely because of the proposal.^[3] Supporters counter with expert reports arguing the tax’s structure as an excise on extreme wealth, with credits for similar taxes paid elsewhere, fits long‑standing rules for taxing residents’ worldwide income and assets.^[15]

What This Fight Reveals About Power And Trust

This clash over the billionaire tax exposes a bigger problem that many conservatives and liberals now agree on: the system feels rigged. Washington cut federal healthcare support, state leaders talk about “hard choices,” yet the richest Californians saw their fortunes soar during years of tech and stock market gains.^[8] Now a union-backed initiative tries to claw back a slice of that wealth, and the loudest voice against it is not a Republican governor but a Democratic one with strong ties to elite donors.^[6] For voters across the spectrum who think the government serves the powerful first, this looks less like a policy debate and more like a struggle over who truly runs the state.

The billionaire wealth tax proposal will appear before California voters in November, after failed efforts by Gov. Gavin Newsom and allies to persuade the union behind the tax to withdraw it.

More from me and @pkwsj: https://t.co/bqTQzK6wCN

— Laura J. Nelson (@laura_nelson) June 26, 2026

At the same time, the proposal itself carries real risks and unanswered questions. There is no fully independent, nonpartisan audit confirming the $100 billion revenue claim, only estimates from proponents and rough state analyses that speak of “tens of billions” and warn of possible long‑term losses if rich residents leave.^[12] Courts have not yet ruled on whether the retroactive date is constitutional, and economists are divided on how many billionaires would actually move or simply pay up.^[15] Whatever happens in November, the vote will be a test of whether frustrated citizens trust direct democracy to fix what they see as elite-driven failures, or whether fear of economic fallout will keep the old system in place a little longer.