Gov. Gavin Newsom tried to broker a last-minute deal to keep a one-time billionaire wealth tax off California's November ballot. He failed. Negotiations between Newsom's office and SEIU-United Healthcare Workers West collapsed after what the union's president described as "a couple of cursory conversations," and the measure will now go before voters in a fight that has split California Democrats against each other and against one of their most reliable labor allies.
The New York Post reported that SEIU-UHW organizers offered to slash the proposed tax rate from 5% to 2%, a significant concession, but Newsom's office rejected the compromise quickly. The governor's office declined comment on the evening the talks fell apart, saying only that Newsom "will have more to say soon."
That leaves California staring down a ballot-box brawl over a proposal to impose a one-time 5% levy on residents whose net worth exceeds $1 billion. The state has more than 200 billionaires with combined wealth exceeding $2 trillion. And both sides are already spending heavily, with opponents raising over $118 million to defeat the measure, including $82 million from Google co-founder Sergey Brin alone, according to AP News.
This is not a left-versus-right fight. It is a fight inside the left, and that makes it far more revealing than a standard partisan clash.
SEIU-UHW president Dave Regan held a virtual news conference where he accused Newsom of refusing to engage seriously with any version of the tax. Regan said flatly:
"What the governor has made clear from the beginning is that he would not entertain any proposal or compromise that would tax billionaires."
Regan also framed the fight in life-and-death terms, claiming that 3.5 million people will lose health insurance, that hospitals and emergency rooms will close, and that "people are going to suffer and die unnecessarily." Those are projections from the union, not confirmed outcomes, but they signal how aggressively SEIU-UHW intends to campaign.
Rep. Ro Khanna, a Democrat from San Jose, joined the press event and called the argument that companies and investors would flee California "hogwash." Khanna framed the opposition to the tax as driven by billionaire political influence, not sound economics.
"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."
SEIU-UHW vice president Debru Carthan went further, accusing Newsom of standing shoulder-to-shoulder with the very people Democrats usually campaign against. "Ironically, Gov. Newsom is in lockstep with [President] Donald Trump and billionaires like Peter Thiel and Sergey Bin on this issue," Carthan said, an apparent misspelling of Brin's name in the published transcript.
The intra-party fracture extends beyond Newsom. The Washington Examiner reported that Democratic gubernatorial candidate Xavier Becerra also opposes the measure, showing the split reaches well into the party's next generation of leadership. Becerra's willingness to break with California Democratic orthodoxy on high-profile issues has become a pattern in this cycle.
The governor's position is awkward, and it grows more so by the week. Newsom has argued that the state-level wealth tax would be difficult to enforce, vulnerable to constitutional challenges, and could cost California more revenue than it generates if billionaires simply relocate. Those are reasonable objections. But they sit uncomfortably next to his own recent rhetoric.
Newsmax reported that Newsom has proposed a sweeping national minimum tax on anyone with a net worth above $100 million, along with a national public equity fund that would give the federal government an ownership stake in artificial intelligence companies. "It's time for an economic reset for America," Newsom declared, adding that "money buys influence, and influence rewrites the rules."
So the governor opposes a billionaire tax in his own state while proposing one nationally. The distinction he draws, that a California-only levy would drive the wealthy to Nevada or Texas, while a federal version would not, has a certain logic. But it also has the feel of a politician who wants to run on populist economics without bearing any of the consequences in his own backyard.
Newsom spokeswoman Tara Gallegos told the Washington Examiner: "The Governor has been clear that he is strongly opposed to a California-only wealth tax... Changing the tax rate doesn't change this measure's fundamental flaws that harm working Californians."
California's volatile political landscape has delivered plenty of surprises to establishment Democrats lately. Tom Steyer's $200 million gamble in the governor's race ended in a crushing primary defeat, a reminder that money and name recognition do not always buy results in the Golden State.
Opponents of the tax point to something more concrete than economic theory: the wealthy are already leaving. Larry Page, Peter Thiel, Jeff Bezos, and Larry Ellison have reportedly established ties elsewhere in recent years. 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 recently sold her sprawling Northern California ranch.
Just The News reported that multiple billionaires, including Mark Zuckerberg, have already left the state. Republican state Sen. Tony Strickland of Huntington Beach warned bluntly: "The minute this passed, we would be in a budget deficit in perpetuity."
Chris Hannan, president of the State Building and Construction Trades Council, broke publicly with fellow labor leaders over the measure. His concern was practical, not ideological, billionaires finance the massive developments that employ thousands of union workers. He told Politico:
"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."
That split within labor itself is significant. When construction trades unions side with the business community against a fellow union's ballot measure, it tells you the coalition behind this tax is narrower than its backers want voters to believe.
Opponents are not waiting around. A group called Building A Better California, backed by Brin and other wealthy Californians, has poured tens of millions of dollars into competing ballot initiatives designed to blunt the wealth tax. One such measure would require audits of programs funded by new state special taxes and includes provisions that critics say could create legal hurdles for implementing the billionaire tax if it passes.
The Stop the Squeeze political committee, which opposes the measure, issued a statement 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.'" The committee added: "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."
Newsom's political adviser Brian Brokaw echoed that framing, telling AP News: "Driving away the state's sustainable tax base for a one-time grab is bad policy and an even worse deal for 40 million Californians who will be left holding the bag."
The California Chamber of Commerce called the measure "unprecedented" and "misguided," warning it "creates a dangerous precedent that will cause more problems than it would ever solve." Even Breitbart noted that some Democrats oppose the tax not because they object to taxing the wealthy in principle but because of how the revenue would be allocated, a dispute over spoils, not philosophy.
Meanwhile, the Democratic front-runner in the governor's race has taken surprising stances that cut against party orthodoxy on other issues, suggesting the old Sacramento consensus is fraying on multiple fronts.
The wealth tax measure aims to generate roughly $100 billion, primarily for California's Medicaid system. SEIU-UHW frames it as a response to federal health care cuts tied to the "Big Beautiful Bill" passed in Washington. Proponents say the money is needed to keep hospitals open and millions of Californians insured.
Opponents say the math does not work. A one-time tax on a mobile population of 200-odd billionaires is not a sustainable funding source. If even a fraction of those billionaires change their legal residence before the tax takes effect, the projected $100 billion shrinks fast. And the constitutional questions, whether a state can impose a retroactive wealth tax on unrealized assets, remain unresolved.
Newsom told The New York Times in January: "This will be defeated, there's no question in my mind. I'll do what I have to do to protect the state." But his inability to negotiate the measure off the ballot suggests his leverage is limited. The union went ahead anyway.
The ongoing turbulence in California Democratic politics makes the outcome harder to predict. Voters may be sympathetic to taxing billionaires in the abstract. Whether they trust a one-time wealth grab to actually deliver lasting results is another question entirely.
California has a habit of promising voters that someone else will pay the bill. Sooner or later, the someone else stops showing up.