Governor Gavin Newsom is mounting a last-ditch pressure campaign to stop a proposed California billionaire tax from ever reaching voters.
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During a call last month, he assured a major Democratic donor the levy would be successfully negotiated away before a June 25 deadline, a person familiar with the call said, asking not to be named discussing a private conversation.
Now Newsom has less than two weeks to make good on his promise and convince the group behind the measure to withdraw its proposal, averting a costly showdown in the November general election. A spokesperson for the governor declined to comment on the call.
The proposal, which would impose a one-time 5% tax on a billionaire’s net worth, has become one of the most closely watched political fights in California, exposing divisions within the Democratic Party and serving as a test of the broader appetite in the U.S. for taxing extreme wealth.
Powerful new allies recently joined Newsom’s crusade. Groups like the California branch of Planned Parenthood and the state’s largest teachers’ union now publicly oppose the tax.
Together, they’ve formed an unlikely bloc against the levy: Newsom and progressive groups as well as Democratic and Republican mega-donors, like Peter Thiel and Sergey Brin.
For SEIU-UHW, the health care union that proposed the measure, and its leader, Dave Regan, the growing opposition means the campaign is no longer just taking on billionaires. It is also going up against groups representing teachers and carpenters, as well as Democratic stalwarts.
“It is becoming clear to Regan that he is running into a brick wall of the folks that he needs most,” said Brian Brokaw, a longtime Newsom advisor who leads the anti-billionaire tax group Stop the Squeeze.
A deal to remove the billionaires’ tax from the ballot would likely involve steering money in the state budget toward health care, which requires support from lawmakers as well as the governor. Experts on California’s budget say it would be virtually impossible for the state to completely backfill the tens of billions of dollars in federal Medicaid cuts that the billionaire tax seeks to remedy.
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The wealth tax is projected to raise about $100 billion,
Google co-founders Larry Page and Brin, the world’s second- and third-richest individuals, already say they’ve departed.
The stakes are particularly high for Newsom, who’s eyeing a 2028 presidential bid once he leaves California’s top job in January after two terms. The Democratic standard-bearer has found himself having to oppose progressives such as Vermont Senator Bernie Sanders to defend tech titans from the wealth tax, at a time when the
More recently, Newsom has started advocating for a federal wealth tax, saying a California-only approach encourages the ultra-rich to flee in favor of lower-tax states. Sanders and Congressman Ro Khanna are also pitching a similar federal tax, a campaign that has picked up steam again now that Elon Musk is a trillionaire following SpaceX’s historic IPO.
Helming the talks on the governor’s side are his former cabinet secretary Ann Patterson and Christine Aurre, his legislative affairs secretary, according to people familiar with the matter.
Under California law, supporters of a voter initiative must gather hundreds of thousands of signatures to qualify it for the statewide ballot — a threshold the proponents of the billionaire tax say they’ve already met. But rules allow them to withdraw a measure before it is certified, which is set to happen on June 25.
That process turns ballot measures into a negotiating tool for corporations, unions and other interest groups, which often ends in a compromise being pushed through the legislature with the governor’s blessing instead of a vote.
Regan, SEIU-UHW’s president, has a reputation of being a “bare-knuckles negotiator who is willing to roll the dice,” said Steven Maviglio, a veteran Democratic strategist in the state. “That makes this one particularly difficult to predict because he is probably willing to go to the ballot if he doesn’t get much of what he wants.”
Debru Carthan, vice president of SEIU-UHW, said in a statement that health care workers “remain open to any concrete and viable solutions” that would prevent a “looming collapse.”
“California is in crisis: our hospitals are closing, our ERs are overwhelmed, and families are being forced to choose between paying for their health care or keeping a roof over their heads,” Carthan said.
The pressure campaign against the tax involves other ballot measures and billionaire-sponsored ads.
Brin is supporting two countermeasures that could void the wealth tax if approved with more votes.
A group backed by billionaire Chris Larsen has so far spent more than $7.3 million in anti-tax messaging, according to AdImpact data, and recently blanketed homes in California with mailers featuring the governor criticizing the wealth levy.
The hospital industry also has a proposal that would make it harder for some unions, including SEIU-UHW, to spend money on politics and on ballot measures. A spokesperson for SEIU-UHW called it an effort to “silence the frontline health care workers.”
SEIU-UHW also faces the prospect of seeing the measure rejected in the general election.
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“We are one of the most trusted messengers for voters in the state of California,” said Jodi Hicks, chief executive officer at Planned Parenthood Affiliates of California, which has previously aligned with Newsom on other matters. “Voters will care where Planned Parenthood is on specific issues.”
She believes the tax will “do more harm than good,” citing its “lack of specificity and accountability.”
The different factions opposing the tax say they are not coordinating efforts. For the California Teachers Association, the billionaire tax bypasses the state’s funding formula, which has strict requirements on tax revenue being directed to public schools.
“We’re not committed to doing stuff that leaves part of our segment, part of workers and communities out,” said David Goldberg, president of the union, who called their rare break with Senator Sanders a “tactical” dispute.
Bob Hertzberg, a veteran of ballot-measure negotiations, is working with Richard Leib, a former University of California regent, in trying to rally center-left Democratic donors to oppose the tax if efforts to keep it off the ballot fail.
“We’re not against a tax. We’re just against this one,” said Hertzberg. “It’s one-time and it doesn’t solve any of the problems that we’re trying to solve.”
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