LOS ANGELES — The union behind California’s proposed billionaire tax said Thursday it would withdraw the ballot measure if Gov. Gavin Newsom supports a smaller wealth tax, an eleventh-hour offer that could reshape a contentious battle over wealth and taxation in the state.
In an open letter to the governor, the Service Employees International Union-United Healthcare Workers West said it would pull its proposed one-time, 5% tax from the November ballot if Newsom champions a 2% tax on billionaires’ net worth instead. The union framed the offer as a compromise aimed at temporarily staving off steep cuts to state healthcare services due to federal funding changes signed into law by President Trump last year.
“In a spirit of unity to fix the problems created by the Trump cuts to the California healthcare system, we would like to join you in enacting a 2% version of our initiative,” the SEIU-UHW wrote to Newsom.
A representative for Newsom didn’t immediately respond to a request for comment. The governor has criticized the proposed 5% tax, which would apply to the net assets of California’s wealthiest 200-plus residents, saying it could deter investment and drive off the state’s largest taxpayers, though he hasn’t proposed an alternative for offsetting Trump’s funding cuts, according to The Wall Street Journal.
In a statement released with the letter, the proposal’s backers said they are willing to agree to a smaller tax “because the crisis is immediate, the timeline is tight, and California needs guaranteed funding now.”
The move is a twist in a contentious battle over wealth and taxes in a state that is home to more billionaires than any other, according to The Wall Street Journal. California relies heavily on personal income tax from high earners to generate revenue. Some of its wealthiest residents have lined up against the proposal, and others have already started looking for ways around it. Opinion polling has consistently shown majority backing for the proposed tax, though the margins aren’t overwhelming, the Journal reported.
California’s powerful labor movement has begun to fracture over the tax proposal. An unlikely coalition of education, housing, law enforcement and healthcare groups, including the California Teachers Association labor union, Planned Parenthood Affiliates of California and the California Medical Association, which represents more than 50,000 physicians, recently formed to oppose the tax, according to the Journal.
The SEIU-UHW’s offer Thursday came a day after state officials confirmed that the billionaire tax gathered enough signatures to qualify for the November ballot, and one week before a key deadline. State rules allow for the union to voluntarily withdraw its initiative from the ballot by June 25. If that doesn’t happen, California’s secretary of state will certify the initiative on that date as qualified for the ballot, according to the Journal.
A person familiar with the SEIU-UHW’s position said it would withdraw the billionaire tax if the governor is able to push a 2% tax through California’s legislature and sign it into law by the June 25 deadline, the Journal reported. If the wealth tax remains on the ballot, billionaires are expected to spend heavily to oppose the measure. Google co-founder Sergey Brin, cryptocurrency executive Chris Larsen and other billionaires have already spent millions of dollars aimed at undermining or opposing the billionaire tax, according to the Journal.
MSI previously reported that the billionaire tax had gathered enough signatures to qualify for the ballot, which labor leaders said reflected broad public support for making the state’s wealthiest residents pay more to fund public services. Read that article.