Gavin Newsom Calls for National Billionaires Tax as Part of Economic Reform Agenda

California Governor Gavin Newsom on Friday advocated for the establishment of a national tax targeting billionaires, positioning the proposal as a central component of what he described as an "economic reset for America." The announcement, made via a Substack post accompanied by a video on social media, comes as Newsom continues to be discussed as a potential candidate for the 2028 U.S. presidential election. Newsom's term as governor is scheduled to conclude in early 2027 due to term limits, and he has publicly acknowledged that he is considering a run for the White House. Earlier this month, Newsom stated that President Donald Trump had directed the Department of Justice to investigate him and his wife as a result of his presidential ambitions.

Newsom's policy rollout features similarities to proposals already advanced by other Democratic figures, such as Representative Ro Khanna of California, who have also signalled interest in the presidency. The governor's messaging centres on the premise that many working Americans are disadvantaged by what he characterizes as a system structured in favour of the wealthiest individuals. "They did everything right, and the system still has nothing for them," Newsom wrote on Friday. He attributed these circumstances to federal tax, corporate, and inheritance codes that he said were "written for a different set of Americans."

Among the specific measures Newsom supports is the implementation of a "true minimum tax on billionaires," which he likened to a "modern Buffett Rule." This rule would require that individuals at the top of the income scale pay at least the same effective tax rate as their workers. The reference is to investor Warren Buffett, who has publicly advocated for wealth redistribution and increased taxation of the ultra-wealthy.

Newsom also called for the closure of tax benefits and loopholes that he said constitute a "private tax code" for the ultra-wealthy, providing advantages not available to most Americans. One example he cited is the "tax-free lifestyle loan" strategy, also known as "buy, borrow, die," where individuals borrow money against appreciated assets such as stocks to minimize taxable income. This approach, which some of the world's wealthiest individuals have reportedly used, has drawn scrutiny in recent policy debates. Amazon founder Jeff Bezos, in an interview with CNBC, stated that if the practice is "a true loophole," it should be eliminated.

In addition to addressing these tax strategies, Newsom proposed revising inheritance regulations and restoring corporate tax rates to their pre-2017 levels. The 2017 tax reform, enacted during President Trump's first term, lowered the corporate tax rate, a move that has been criticized by some for its perceived benefits to large corporations and wealthy shareholders. Newsom further suggested the creation of a "national public equity fund," which he said would "ensure every American owns a stake in the future being built by AI."

Despite his support for a federal-level billionaires tax, Newsom maintained his opposition to a similar measure currently slated for a vote in California. The state-specific proposal, advancing to the ballot as a result of a campaign led by a healthcare workers' union, would impose a one-time 5% tax on the total wealth of billionaires residing in California. The union behind the measure declined to withdraw it by a recent deadline, securing its place on the November ballot.

Newsom and other critics of the California initiative argue that implementing a wealth tax at the state level could prompt billionaires to relocate, resulting in the loss of wealth from California. They also contend that the proceeds of the tax would not necessarily be allocated to essential state priorities. "The fight to make the wealthiest Americans pay more in taxes is not one we should be fighting state by state," Newsom wrote. He emphasized the mobility of billionaires, stating, "You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do."

The debate around taxing the ultra-wealthy has been ongoing at both state and federal levels in the United States. Proponents of wealth taxes argue that such measures could address growing economic inequality and generate revenue for public services and infrastructure. Opponents, however, cite concerns about capital flight, potential negative impacts on investment and entrepreneurship, and challenges associated with assessing and collecting taxes on unrealized gains or illiquid assets.

Newsom's proposal aligns with broader Democratic Party discussions about tax policy but distinguishes itself by emphasizing a national approach rather than piecemeal state action. The proposal to close loopholes such as "buy, borrow, die" has also drawn bipartisan attention in recent years, with calls for congressional review and potential legislative action.

The outcome of the California ballot measure, as well as the reception to Newsom's national tax proposal, may influence the direction of tax policy debates ahead of the 2028 presidential election. The issue is expected to remain a point of contention among candidates and policymakers, reflecting differing perspectives on economic fairness, fiscal policy, and the role of government in addressing wealth concentration.