Could Gavin Newsom Kill the California Wealth Tax?

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Gov. Gavin Newsom has been against the California Wealth Tax aka the Billionaires Tax from the beginning, but as of last month he hadn't done much to stop it. Supporters managed to gather 1.5 million signatures, nearly twice the number needed to get it on the ballot. It seemed to be heading for a vote in November. But now, Newsom has roused himself and seems to be fighting back.

Gavin Newsom and powerful Democratic-aligned groups are racing to kill a proposed wealth tax on California billionaires, including going to extraordinary lengths to isolate the union leader championing one of the nation’s most controversial ballot measures.
With a late-June deadline to cut a deal averting a ballot fight, Newsom’s team has turned the campaign against the one-time levy on billionaires into a show of force. In recent days, labor unions representing construction workers, carpenters, police officers and teachers, as well as prominent health care groups like Planned Parenthood, have broken with SEIU-UHW to oppose the measure, which has already driven some affluent Californians like Google co-founder Sergey Brin to relocate.
The growing coalition is tightening pressure on SEIU-UHW President Dave Regan, whose wealth-tax crusade has roiled California politics for months, to pull the measure. The message to Regan is blunt: Back down now, or risk going into a costly ballot fight increasingly alone.
“Dave Regan is seeing very plainly what he’ll be up against if he goes through with this,” said a consultant working to defeat the measure who was granted anonymity to discuss sensitive dynamics.

But so far, Regan and the SEIU aren't backing down, though he apparently has a habit of doing exactly what he's done here, i.e. creating a ballot measure and then negotiating an alternative.

Regan and his lieutenants have long insisted that Newsom can’t offer an alternative that comes close to matching the windfall from the billionaire tax, which SEIU-UHW calls vital to prevent hospital closures and mass job losses from deep federal cuts. Newsom said earlier this year that the sides were at an impasse after initial talks foundered.
But Regan has a long history of filing ballot initiatives and then withdrawing them after securing deals. And the union’s tone has shifted in recent days, with chief of staff Suzanne Jimenez saying in a statement that the union was “fully open to collaborating on concrete solutions that solve the problems created by Congress.”

In other words, the tough talk may just be a negotiating tactic. If nothing else, the perception of the measure's chances of making it to the ballot have shifted. Betting markets used to see it as a sure thing. Not so much anymore.

The prediction market Polymarket placed the chances of the 2026 Billionaire Tax Act qualifying for the November ballot at 31 percent on Tuesday morning, down from 90 percent at the start of the month and from 74 percent on Sunday.
The steep decline suggests growing skepticism among traders over whether proponents of the legislation can overcome legal and political barriers before the June 25 cutoff set by state officials, particularly as Democratic Governor Gavin Newsom and Democratic-aligned groups race to get rid of the measure.

Assuming it does make it to the ballot, it still has to pass. Polls show that's possible but a recent vote in San Francisco is raising doubts.

Polling has put public support for the measure at around 50%, leaving it vulnerable to well-funded outside attacks. And the recent defeat of San Francisco’s Proposition D — a tax on companies that pay their CEOs significantly more than their workers — suggests that California’s appetite for taxing the rich does have its limits. Moderate candidates and propositions backed by billionaires like Moritz and Larsen also over-performed in the city’s elections this month.

Even if it does get close to passage, the billionaires still have a failsafe. They managed to get two competing initiatives on the ballot, either one of which could disqualify the wealth tax.

The billionaires also seem to be slightly better organized as they head into round three. Past the “throwing spaghetti at the wall” phase, many seem to have coalesced around the efforts of Building a Better California, which qualified two of its counter-initiatives for the ballot just days after the unions qualified the Billionaire Tax Act. The group has raised more than $100 million for its efforts...

Under California law, if there are competing ballot initiatives, the one that gets the most votes takes effect. All Brin and his group have to do is get one more vote than the SEIU wealth tax and the will have knocked it out of contention.

One of the two counter-measures bans retro-active taxes, which would invalidate the mechanism used by the wealth tax to trap billionaires into paying. That same initiative would also ban new taxes on personal property.

The second counter-measure would require state audits of new taxes and direct the money from such taxed toward education rather than health care, essentially cutting the SEIU out of the money.

We'll know if Newsom was able to buy off the SEIU and pull the tax from the ballot in the next two weeks. Stay tuned.

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