Gavin Newsom fails to stop California’s controversial billionaire tax from going to voters

Gov. Gavin Newsom failed to broker a last-minute deal to keep California’s controversial billionaire tax off the November ballot, setting up what could become one of the nation’s most expensive and politically explosive ballot fights over taxing the ultra-wealthy to cover federal health care cuts.

Newsom has vowed to stop the one-time 5% tax on residents whose net worth exceeds $1 billion, but the collapse of negotiations will the wealth tax backers at SEIU-United Healthcare Workers West will now require the governor to expend an incredible amount of political capital. 

Dave Regan, the bare-knuckle political brawler who leads SEIU-UHW, said during a virtual news conference Thursday that the negotiations involved “a couple of cursory conversations what the governor’s office,” but the interest in cutting a deal “was basically nonexistent.”

“What the governor has made clear from the beginning is that he would not entertain any proposal or compromise that would tax billionaires,” Regan said.

The governor’s office declined comment Thursday evening, but a spokesperson for the office said Newsom will have more to say soon.

Voters will be forced to decide whether California should impose an unprecedented wealth tax, which supporters say is needed to offset looming federal health care cuts as a result of President Trump and Republican’s “Big Beautiful Bill.”

Newsom, business groups like the Chamber of Commerce and a labor coalition that includes the State Building and Construction Trades Council have warned that the wealth tax could accelerate the flight of companies, investors and startups already leaving the Golden State.

Earlier this month, CalChamber issued a statement saying the “unprecedented wealth tax is not only misguided but creates a dangerous precedent that will cause more problems than it would ever solve.”

Rep. Ro Khanna (D-San Jose) called that argument “hogwash” during the SEIU-UHW’s press event Thursday.

“The only reason we’re having this conversation is because people are concerned about the billionaire donor class, and they’re concerned about the money they could be spending in elections,” Khanna said.

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Newsom refused to back down last week after organizers behind the billionaire tax initiative offered to reduce the proposed tax from 5% to 2%.

Regan, who has built a reputation for using statewide ballot initiatives as a cudgel in negotiations, said Newsom “and his office responded very quickly, and they rejected our efforts to solve this problem.”

He added, “Three and a half million people are going to lose health insurance. People are going to suffer and die unnecessarily. Hospitals and emergency rooms will close, and we thought it was important to do everything we could to try to solve that problem. The governor rejected it.”

California is home to more than 200 billionaires whose combined wealth exceeds $2 trillion. Supporters argue even a small slice of that wealth could preserve Medi-Cal, hospitals, food assistance and education programs facing financial pressure. 

Opponents counter that the state risks permanently driving away the very taxpayers responsible for a disproportionate share of California’s income tax revenue.

Google co-founder Larry Page, Palantir co-founder Peter Thiel, Amazon founder Jeff Bezos and Oracle founder Larry Ellison have all reportedly established ties elsewhere in recent years, while Google co-founder Sergey Brin, SpaceX investor Steve Jurvetson and AI executive Naveen Rao have relocated to Nevada’s Lake Tahoe region. 

Former Hewlett-Packard and eBay CEO Meg Whitman also recently sold her sprawling Northern California ranch amid the growing debate over the proposed wealth tax.

The prospect of another wave of departures has fueled an aggressive counteroffensive from Brin and other wealthy Californians. Through Building A Better California, the group has poured tens of millions of dollars into competing ballot initiatives designed to blunt or potentially neutralize the billionaire tax if voters approve it.

One of those measures, which also qualified for the November ballot, would require new audits of programs funded through new state special taxes and includes provisions critics say could create legal hurdles for implementing the billionaire tax.

Officials for the Stop the Squeeze, a political committee opposing the billionaire tax, issued a statement to The Post arguing that “all of the serious issues voters care about — healthcare, school funding, the cost of living — would get worse by this so-called ‘wealth tax.’”

“Trading away the state’s sustainable tax base for a one-time cash grab doesn’t just target 200 people — it would harm 40 million Californians who would be left holding the bag.”

Chris Hannan, president of the State Building and Construction Trades Council, publicly broke with fellow labor leaders this month, warning that a retroactive wealth tax could discourage billionaires from financing major developments that employ thousands of union workers.

“It’s not because we feel that anyone shouldn’t have to pay their fair share, but doing a retroactive tax, we believe, would drive people out of the state and drive investment out of the state,” Hannan told Politico.

Supporters contend the billionaire tax asks only a tiny number of the state’s wealthiest residents to shoulder the burden rather than forcing cuts to hospitals, clinics and health coverage for millions of Californians.

“Ironically, Gov. Newsom is in lockstep with [President] Donald Trump and billionaires like Peter Thiel and Sergey Bin on this issue,” said Debru Carthan, vice president for SEIU-UHW.

“Gov. Newsom has had seven months to put forward a solution to prevent hospital from closing and save patient lives, but he hans’t — because Gov. Newsom has no plan.”

Newsom has argued a California-only wealth tax would be difficult to enforce, vulnerable to constitutional challenges and ultimately cost the state more revenue than it generates if billionaires relocate.

“This will be defeated — there’s no question in my mind,” Newsom told The New York Times in January. “I’ll do what I have to do to protect the state.”