Gavin Newsom is using a proposal to tax the ultra-wealthy to stake out economic populist ground in the emerging Democratic presidential primary. But first he’ll have to get past a levy on billionaires he opposes in California, and backlash from the left in his home state.
Newsom’s call for a national tax, issued hours after the California wealth tax finalized its place on the November ballot, was a classic move by the California governor: Seize the news cycle with a splashy announcement in an effort to reframe the conversation on his own terms.
But the immediate reaction to his proposal — with the right painting him as a wild-eyed radical and the left casting him as a corporate phony — underscores the narrow margin for error of Newsom’s strategy. The question now is whether Newsom can persuade voters that his populism reflects a genuine governing vision rather than political calculation, and if he can evolve from the Democratic Party’s most prominent Donald Trump antagonist into a national leader with an affirmative economic agenda.
“This notion of saving our democracy, which has been a passion of mine, against Trump and Trumpism, and democratizing our economy are the exact same fight,” Newsom told POLITICO in an interview Friday. “And so all of this knits together from my perspective.”
The brawl over billionaires is set to dominate California’s political landscape in the final months of Newsom’s eight-year tenure. The Democratic governor’s down-to-the-wire pressure campaign failed to derail a health care union’s ballot initiative to impose a one-time, 5 percent tax on the assets of California’s wealthiest residents to offset deep federal health care cuts.
The billionaires’ tax standoff has drawn outsize attention because it has mobilized tech titans, like Google co-founder Sergey Brin, who have poured tens of millions of dollars into the fight and moved their assets out of California.
But it has also resonated nationally as a proxy for the Democratic Party’s fight over its economic agenda and overall direction — a struggle in which progressives led by New York City Mayor Zohran Mamdani achieved stunning victories this week over establishment politicians. Newsom is poised to be a central figure in that debate if he runs for president.
Newsom’s announcement came just days after the electoral earthquake in New York set off a fresh round of ideological warfare within his party — squabbling that he said was nothing new after coming up in San Francisco politics. Though he was considered a moderate by San Francisco standards, Newsom argued he and fellow California Democrats have led on many of the same causes now championed by the ascendant generation of progressives.
“This is literally so familiar. It is impossible to tell you how familiar this is, going back 25 years,” Newsom said. “Mamdani — to his credit, I admire the hell out of him in terms of what he’s able to accomplish and how he communicates. But some of his policies, I did that in 1998. It’s no knock on him, but everybody looks at it as a revelatory novelty.”
Still, Newsom’s embrace of a new tax regime marks a notable contrast from most of his tenure as governor, where he consistently rebuffed liberal allies’ push for more revenue, including state-level wealth taxes.
“Are you supporting a wealth tax? No, yet again. Why the hell do you keep writing about that?” he seethed at reporters in 2024 after a Wall Street Journal op-ed implied he would back such a proposal.
Newsom has vehemently opposed the current wealth tax measure from the start, warning it would decimate California’s tax base and undermine the state’s economic competitiveness. But even as he loudly denounced the initiative and worked actively behind-the-scenes to stop it, he began to drop hints at how he might pivot to a national economic platform that channels some of the anti-billionaire ferment driving the state tax proposal.
For months, he has emphasized that a wealth tax only works if it’s national, reiterating his opposition in recent days to a “California-only wealth tax.” But Newsom has long defended California’s progressive tax code, which levies steep income taxes on top earners to fund programs like universal school meals.
In a recent speech telegraphing a populist economic message — an address that functioned as a test run for a presidential stump speech — Newsom argued the wealth tax push reflected pervasive discontent with a “broken” economy that had concentrated most of the nation’s wealth in the hands of a tiny sliver while middle-class Americans stagnated.
That trail of remarks, Newsom said, is evidence that his newly-unveiled national plan wasn’t hastily constructed.
“It’s not like I woke up and thought, ‘Oh, the billionaire's tax is on, I need to say something,’” he said. “I've been saying this for many, many months.”
Proponents of the initiative argued their proposal effectively forced the governor’s hand.
“I do know [until] we came forward with this and we crossed the deadline, he had not been talking about anything of the kind,” said Dave Regan, leader of SEIU-UHW, the healthcare union sponsoring the measure. “So we welcome his evolution on the issue. We just wish the governor would focus on the immediate needs of California and not worry about what happens in two to four years in Washington, D.C.”
Supporters of the California tax initiative ripped into Newsom’s national proposal as a political dodge, dangling a hypothetical national policy win while opposing a concrete proposal facing voters in November.
“It's not going to pass muster to say, ‘well, when we were fighting to have a billionaire tax to save health care for 3 million Californians, I sided with the billionaires, but in the future I want to tax these billionaires.’ That just isn't going to pass muster,” said California Rep. Ro Khanna, a progressive Democrat who is eyeing his own 2028 presidential run. “That's like saying I was for it before I was against it, and it's total flip flopping.”
That criticism isn't entirely new. As he first ran for governor in 2018, Newsom courted progressive groups by embracing single-payer health care, only to later argue that such a sweeping overhaul would have to come at the federal level. Critics see the same pattern in his opposition to a state wealth tax while he calls for a national tax on billionaires.
Newsom acknowledged that some voters may find his two positions cognitively dissonant, to which he said, “I can only control what I can control.” As for detractors from either side of the ideological spectrum, he was dismissive.
“I don’t care. You say it’s communist … that’s not even interesting to me,” Newsom said. “If you say it’s not good enough, well, with all due respect, I went with the teachers, the firefighters, I went with Planned Parenthood and with the vast majority of people who know better about what the impact of this particular initiative would do to California.”
The liberal coalition he’s assembled — influential, Democrat-aligned groups that have amplified Newsom’s message that the wealth tax is the wrong fix to real problems of federal cutbacks and widening wealth disparities — could help persuade voters to reject the initiative while inoculating Newsom against criticism from the left. Polls show a majority of California Democrats support the tax, but Newsom advisers say they are confident the measure will be handily defeated.
Newsom’s position on the ballot initiative could also soften the vulnerabilities inherent with being a Democrat from California. Newsom’s strenuous opposition to the wealth tax has shored up his record of fiscal moderation, countering critiques that he governed as an unrestrained tax-and-spend liberal. It has bolstered his longstanding ties to Silicon Valley — a vital source of campaign cash.
But Newsom has signaled there could be more strains to come between him and tech titans, and not just because he is calling for taxing them more on a national level. His proposal unveiled on Friday also called for a national public equity fund that would let all Americans share in the profits generated by artificial intelligence companies. He wrote that he envisioned a new political movement that crossed typical political dividing lines like income or education — all united by their anxieties of AI-fueled disruption.
“There’s a new working coalition here that’s taking shape, that is something we haven’t seen in the past. Democratize the economy, so we can save democracy. Blue-collar worker and the white-collar worker,” Newsom said. “There’s something happening here. It’s not triangulation, it’s not moderation…. It’s an authentic thing that's taking shape, and so it’s deeply what we’re trying to emphasize.”
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