Something about Gavin Newsom’s current position seems to go against itself. Two things at once: California’s governor is saying that the very rich should pay more in taxes and working to stop a ballot measure in his own state that would make them do that. People who are watching can feel the tension. Whichever way you look at it, this kind of political balancing act either seems like smart planning or just plain lying.
Newsom wrote a long post on Substack last Friday making his case for a national minimum tax on people with a net worth of more than $100 million. The news came just one day after California approved the California Billionaire Tax Act, a ballot measure backed by unions that would tax people in the state who are worth more than $1 billion once. Newsom is against that bill. Without the political context, his reasoning is pretty simple: wealth is mobile, and it’s easy for the very rich to avoid state-level taxes. “You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do,” he wrote. That line has some weight to it. Sergey Brin, Larry Page, and a few other well-known people have either already left California or made it clear they’re thinking about it. It’s hard to say for sure if that’s a direct result of tax policy or just the way that very wealthy people naturally move to places where the conditions are good. The pattern is real, though, so it can’t be thrown out.
What Newsom wants the federal government to do is more than just set a wealth floor. He wants to stop rich people from borrowing against their stock portfolios to pay for their lavish lifestyles without having to pay taxes on the interest. This is a loophole that has let the very rich live a lavish life without having to pay taxes on their capital gains. He wants the inheritance tax rules to be changed and warns of what he calls a “era of inherited aristocracy” that is coming. He also wants the corporate tax rate to go back to what it was before Trump took office. Additionally, he wants the U.S. government to own shares in companies that make AI, which is more like Bernie Sanders than his own moderate image.
Take a moment to think about that last part. Not many people in the Democratic Party think that the federal government should own a piece of AI’s economic benefits. Or at least they didn’t until recently. Newsom says it’s about economic fairness: as AI changes the job market and makes the rich richer, regular Americans should be able to share in the growth through a national public equity fund. It’s an interesting idea. At this point, it’s really hard to tell if it’s a policy that will work or a well-thought-out talking point aimed at voters in 2028.
Not everyone is happy with it. Rep. Ro Khanna, who works in Silicon Valley and fully supports the California ballot measure, spoke out strongly against it at a press conference on the same day. Khanna stated that Newsom’s federal counterproposal was “toothless” and suggested that it was made to please the tech industry rather than challenge it. He also said that California got record amounts of venture capital in the first quarter of 2026, which directly contradicts the claim that billionaires are leaving the state. “There’s more investment in California now, not less,” he stated. One quarter doesn’t answer the question of long-term capital flight, but it does add to the complexity of the story.
Already, more than 1.6 million people have signed on in support of the ballot measure, which is one of the highest numbers ever recorded in California. That is not a movement on the edge. There is a real anger about the concentration of wealth that isn’t going away, no matter how many economists argue about the details. The SEIU-UHW started the initiative and wants the money to go to programs that help people with food, education, and health care. A lot of unions and healthcare groups are against it because they think it will make state revenue unstable.
It seems like Newsom is playing a longer game as we watch him deal with this. His plans for the federal government put him in line with the populist left and keep him from getting involved in a messy fight at the state level that could hurt the economy. It’s a good spot for someone who wants to live in the White House. The question Democrats will ask him for years is whether it shows real conviction or just good image management.