Newsom Backs Bid To Counter Billionaire Tax Effort

BY PAUL KIERNAN

California Gov. Gavin Newsom has opposed a highprofile ballot measure that would tax billionaires’ wealth. Now he is endorsing a different measure aimed at prohibiting wealth taxes.

Newsom announced his endorsement Friday via the campaign backing the antitax measure, known as Proposition 42. “Californians deserve to have their retirement and life savings protected from new state taxes,” Newsom said.

Prop. 42 has raised tens of millions of dollars from a political committee funded in part by billionaires, including Google co-founder Sergey Brin. This effort took off after a healthcare-workers’ union proposed a one-time 5% tax on billionaires’ wealth. Voters are set to decide on both ballot measures on Nov. 3.

The proposed billionaire tax, aimed at offsetting steep cuts to Medicaid funding signed into law last year by President Trump, is novel in the U.S. Unlike the income taxes that most Americans pay, it would apply to the net worth of California residents with net assets of $1 billion or more.

The wealth tax has exposed bitter divisions in the Democratic Party and in California’s labor movement.

Newsom came out against the tax last year, weeks after it was proposed by a healthcareworkers union, and has argued the levy could push the state’s largest taxpayers to flee. The state Democratic Party, meanwhile, voted in August to endorse the measure.

Prop. 42 could invalidate a billionaire tax by changing California’s constitution to prohibit new taxes on financial assets or personal property, other than real estate.

The California Democratic Party and several large unions oppose it.

California billionaires have poured money into campaigns claiming the tax could weaken the state’s fiscal base or be expanded by the legislature to apply to a broader swath of residents.

A likely legal battle looms if voters approve this measure and the wealth tax.

The union backing the billionaire tax effort—the Service Employees International Union-United Healthcare Workers West—said Newsom was siding with California’s wealthiest residents over healthcare for children and families.

“Governor Newsom is in lock step with his billionairebackers,” Debru Carthan, the union’s vice president, said.