California’s debate over a potential tax on its wealthiest residents is intensifying, with Governor Gavin Newsom voicing strong opposition to the proposed 2026 Billionaire Tax Act. The governor’s criticism comes as some of the state’s billionaires have publicly signaled intentions to relocate should the measure pass.
In an interview last Thursday, Newsom warned that the tax could have negative long-term consequences for the state. He specifically stated that the tax “will reduce investments in education,” impacting funding for teachers, librarians, childcare, firefighting, and police.
Newsom further explained that the wealth tax could lead to a decline in the state’s overall tax base, ultimately reducing revenue available for essential social services. This concern is amplified by reports that venture capitalist Peter Thiel, tech investor David Sacks, and Google cofounders Larry Page and Sergey Brin have taken steps to leave the state.
Newsom’s Fight Against the Tax
The 2026 Billionaire Tax Act, if it qualifies for the November ballot, would impose a one-time 5% tax on the net worth of residents exceeding $1 billion. The tax would apply to assets including stocks, bonds, private businesses, cash, art, and intellectual property. Proponents argue the tax is necessary to offset potential losses to healthcare funding—between $66 billion and $128 billion over the next decade—resulting from the One Big Beautiful Bill Act, according to the California Hospital Association.
A study from U.C. Berkeley estimates the tax could generate $100 billion in revenue over five years. Despite this potential revenue, Newsom remains opposed. As a direct-to-voter initiative, the governor lacks the power to veto the measure if it passes, but has publicly urged voters to reject it.
Recent polling data indicates a close race, with 48% of likely voters supporting the initiative and 38% opposed, according to a poll conducted by Mellman Group for Republican strategist Mike Murphy. Newsom has characterized the proposal as a short-term fix to a long-term problem, exacerbated by the impacts of H.R. 1.
While Newsom has not endorsed a national wealth tax, he acknowledged it as a topic for discussion, calling it “interesting” and “challenging.” He maintains that California already has the “most progressive” tax structure in the U.S. and expressed reservations about the specific proposal put forth by a local branch of the Service Employees International Union.
Frequently Asked Questions
What would the 2026 Billionaire Tax Act tax?
The act would impose a one-time 5% tax on the net worth of California residents with over $1 billion in assets, including stocks, bonds, private businesses, cash, art, and intellectual property.
What are proponents of the tax hoping to achieve?
Proponents say the tax is critical to funding the state’s health care by offsetting cuts enacted under the One Big Beautiful Bill Act, which could result in significant Medicare and Medicaid revenue losses.
What is Governor Newsom’s primary concern with the tax?
Newsom believes the tax could ultimately harm the state by reducing investments in essential services like education, firefighting, and police, and by decreasing the state’s tax base.
As the debate continues, it remains to be seen whether the 2026 Billionaire Tax Act will qualify for the ballot and, if so, whether California voters will approve this significant change to the state’s tax structure.
