California Gov. Gavin Newsom, who has voiced his opposition to a proposed California billionaires’ tax multiple times, on June 26 proposed a federal billionaires’ tax, under which anyone with a net worth above $100 million would be subject to a minimum tax rate.
Newsom, who is considering a 2028 presidential run, said he also wants to make it illegal for the wealthy to borrow against their stock portfolios, and called this out as a “tax-free lifestyle loan” where the ultra-wealthy report no taxable income while their assets appreciate and are passed onto their children.
“The wealthy have their own private tax code full of loopholes and exemptions that most people have never heard of, and they’re counting on politicians in Washington to maintain it and keep quiet,” he wrote on his Substack. “But this system can be undone.”
The U.S. tax code does not tax unrealized gains—appreciated assets that have yet to be sold—in the stock market. Newsom’s proposed minimum tax on individuals with a net worth above $100 million would effectively operate as a wealth tax and impose taxation on unrealized gain.
His proposal to prohibit borrowing against stock portfolios without reporting income would close a potential loophole to the proposed wealth tax.
Publishing his own Substack to counter Newsom’s proposal, Joshua D. Rauh, senior fellow at Stanford University’s Hoover Institution, said if taxpayers had to pay tax every time an asset appreciated, many would be forced to sell assets to just cover the tax bill.
“[This would generate] liquidity problems and potentially significant market distortions. The difficulties would be even greater for illiquid assets such as privately held businesses or real estate,” Rauh wrote in his Substack. “Once income and taxes are measured using conventional definitions, the notion that billionaires pay lower tax rates than ordinary workers simply does not hold up.”
Venture capitalist David Sacks, who was appointed by President Donald Trump as the White House artificial intelligence and crypto czar, wrote on X on June 26 in response to Newsom’s proposal: “Today was the day that Gavin Newsom was supposed to save the tech industry by cutting a deal to kill the Billionaire Tax Act [BTA]. Instead he came out as DSA-adjacent, and BTA will be on the ballot in November. See y’all in Texas!”
DSA refers to the Democratic Socialists of America, the country’s largest socialist organization.
Newsom proposed additional ideas, including that the federal government should set up a national public equity fund that owns major stakes in AI companies, and should redistribute that wealth through what could include significant severance and portable benefits.
Newsom also said inheritance rules need to be changed as roughly $124 trillion changes hands through inheritance in the “largest intergenerational wealth transfer” ever, and he wants to raise corporate tax rates to what they were before President Donald Trump’s first term.
“If we do not act, that transfer of wealth among the ultra-wealthy will lock in a permanent American aristocracy of inherited wealth, with all the political consequences the founders warned us about,” he said.
Newsom published his post a day after Service Employees International Union-United Healthcare Workers West (SEIU-UHW), an influential healthcare union in California, pledged to move forward with a California billionaire tax initiative on the November ballot. The union is part of the Billionaire Tax Now Coalition, a sponsor of the measure.
Despite his proposal for a similar national tax, Newsom has long been a strong critic of the state initiative, which proposes a one-time tax of up to 5 percent on those with a net worth of more than $1 billion living in California as of Jan. 1, 2026. The initiative would direct 90 percent of its revenue to healthcare and 10 percent to food assistance.
Newsom said the measure’s spending priorities ignore public schools, safety net clinics, and reproductive healthcare centers that Planned Parenthood has supported. He added that this type of taxation shouldn’t occur at the state level because wealthy Californians will just move to states with lower taxes.
“I’m voting no because this measure dedicates almost all of the revenue it raises to a single category of state spending,” he said. “We can’t let a single advocacy organization, however well-intentioned, write the state’s tax code on its own terms.”
A study by the Hoover Institution found the California tax would generate approximately $40 billion in revenue instead of the projected $100 billion and would lose the state an estimated $25 billion after other costs are considered.
“Our analysis finds that the billionaire tax is likely to raise far less revenue than advertised, and once lost income tax revenue from departures is considered, it is likely to leave California worse off financially,” Rauh said.
One of the billionaires who has left the state, Google co-founder Sergey Brin, donated $82 million to Building a Better California, a political committee that backs initiatives opposing the tax and has raised more than $118 million.
The Hoover study found that six billionaires have publicly left the state since the initiative’s filing and the Jan. 1, 2026, residency snapshot date, wiping off $536 billion, or nearly 30 percent, of the taxable wealth the proposal targets.
The study said nearly $12 billion in tax revenue was lost from Brin’s departure alone, while billionaires Peter Thiel, Mark Zuckerberg, and Steven Spielberg have also recently left the state. It estimates many more have already left without making a public announcement.
On June 17, immediately after California Secretary of State Shirley N. Weber announced the proposal had garnered enough signatures to become eligible for the general election ballot, the Billionaire Tax Now Coalition said it would abandon the 5 percent tax if Newsom would join the group in supporting a 2 percent wealth tax.
Newsom spokesperson Tara Gallegos said that scaling the tax back doesn’t remove its “fundamental flaws that harm working Californians.”
“The Governor supports making the wealthiest Americans pay their fair share, but this poorly designed state-only measure will defund teachers, schools, clinics, and public safety,” she said.
The Associated Press contributed to this report.
