California Gov. Gavin Newsom failed to persuade his labor backers to drop their wealth tax from the November ballot, so now we’ll find out if he’ll spend political capital to defend the billionaires or instead try to surf the populist wave to the White House. Bet on his defense of the donors.
The Governor had until Thursday to convince SEIU-United Healthcare Workers West to yank its ballot initiative that seeks to impose a 5% tax on the net worth of California residents with more than $1 billion in wealth. The union said no. Mr. Newsom opposes a state wealth tax because he fears it will drive off the billionaires who hoard much of the state’s wealth.
That is the donor-class panic, but a 5% levy on extreme wealth funds public services and shared prosperity. It will fix the state’s budget problems, which are caused by the corporate starvation of vital public services and the suppression of fair public-sector wages and benefits.
Mr. Newsom had myriad levers he could have pulled to side with working people. For instance, he might have enforced the $25 minimum wage for healthcare workers the state enacted in 2023 at the union’s behest. But the Governor has shown time and again he’s unwilling to take on the corporate monopolies that dominate Sacramento.
The Governor is trying to walk a line between his Silicon Valley donors and his party’s ascendant working-class wing. The Democratic Socialists of America demonstrated the growing influence and organization of the working class last week in New York’s primaries. Mr. Newsom doesn’t want to get swept away by the populist wave as he prepares to run for President in 2028.
This explains his endorsement on Friday of a national wealth tax—a hollow effort to signal his sympathy for the working class after opposing the union ballot measure. “The system America’s founders built was designed to prevent the concentration of power in a few hands, but we have allowed that concentration to happen anyway, slowly, in plain sight, over decades,” Mr. Newsom said.
About time someone told him the truth about the Founders. Today’s young progressives correctly see them as defenders of an unequal order built on enslaved labor and stolen land. If Bernie Sanders and Zohran Mamdani had been around at the founding, they would have demanded that Thomas Jefferson’s Monticello and George Washington’s Mount Vernon be expropriated and the enslaved people emancipated.
The Founders designed the Constitution with checks and balances to prevent power from being concentrated in any single branch of government to safeguard individual liberty. They also worried about entrenched aristocracy. The Fifth Amendment thus requires just compensation when taking property, which is exactly the fair return a 5% tax on publicly-built infrastructure would provide.
A wealth tax is also constitutional, as it requires that “direct taxes” be apportioned equally among the states based on population. On that standard, California’s billionaires would finally pay their fair share like the rest. California would be a pacesetter, not an outlier.
Mr. Newsom is trying to keep Silicon Valley donors in his corner by opposing the state wealth tax. But at the same time he’s betraying the union campaign by parroting the donors’ arguments. One lesson from the New York primaries is that trying to appease the billionaire class doesn’t work. Mr. Newsom may soon discover that too.
