A Democratic governor who calls himself a champion of working people refuses to let billionaires pay 2 percent.

"I want a Democratic party that will stand for the working class. Whose side are you on?"

— Rep. Ro Khanna, on Gov. Gavin Newsom's refusal to back even a scaled-down billionaire wealth tax

Gavin Newsom has spent his political career building a brand as California's progressive standard-bearer. He speaks at labor rallies, champions climate action, and uses the language of class struggle with practiced ease. The problem is that when presented with an actual policy that would redistribute wealth from the richest people in the state to fund healthcare for the rest, he said no. Then he said it again, even after the ask was cut by more than half.

The California Billionaire Tax Act qualified for the November ballot on June 17 after the secretary of state verified enough petition signatures. The original proposal would impose a one-time 5 percent tax on roughly 200 California residents whose net worth exceeded $1 billion as of January 1, 2026. Proponents estimate it would generate $100 billion, with 90 percent dedicated to healthcare and the remainder split between education and food assistance.

The money is not theoretical. Federal Medicaid cuts from last year's "One Big Beautiful Bill Act" are projected to cost California $30 billion annually. The state Department of Health Care Services estimates close to 3 million Californians will lose coverage over the next two years as federal funding evaporates. Hospitals and clinics face closure. Healthcare workers face layoffs.

The union behind the initiative, Service Employees International Union United Healthcare Workers West, has spent more than $31 million pushing it. SEIU-UHW President Dave Regan called it a response to "literally a collapse of our healthcare system."

With the ballot qualification secured and pressure mounting from both wealthy opponents and wavering allies, the Billionaire Tax Now Coalition made a concession. In an open letter delivered Thursday, June 18, they offered to reduce the tax from 5 percent to 2 percent if Newsom would endorse it as a two-year bridge measure. The coalition argued the scaled-down levy could prevent 150,000 healthcare job losses and preserve coverage for 3.2 million Californians.

Newsom's office declined.

Tara Gallegos, a spokesperson for the governor, said Newsom had "strongly opposed" the wealth tax from the beginning and that "changing the tax rate doesn't change this measure's fundamental flaws that harm working Californians." She argued the proposal would defund teachers, schools, clinics, and public safety.

Translation: the governor who routinely calls himself a fighter for ordinary people drew the line at asking billionaires to pay even a fraction of what they owe. The 2 percent figure is not punitive by any measure. It amounts to a rounding error on net worths measured in tens and hundreds of billions. But Newsom's calculus was never about the size of the tax. It was about protecting his relationship with California's wealthiest residents while he positions himself for a 2028 presidential run.

The opposition war chest tells you everything about who stands to lose. Google co-founder Sergey Brin, worth $300 billion and now a Trump supporter, has contributed $82 million to Building a Better California, a committee backing countermeasures designed to invalidate the wealth tax if it passes. Former Google CEO Eric Schmidt, venture capitalist John Doerr, Ripple Labs co-founder Chris Larsen, and investor Ron Conway have all poured millions into opposing campaigns. The opposition has collectively raised $107.9 million as of mid-June.

Brin reportedly relocated to Nevada in response to the tax threat. Meta CEO Mark Zuckerberg shifted his primary residence out of state before the January 1 cutoff date. Fortune reported that six billionaires who left California last year would have generated $27 billion under the proposed measure. The state has reportedly lost a trillion dollars worth of wealth over fears of the billionaire tax alone.

The exodus is real, and it matters. But it also reveals something about the nature of billionaire residency: their attachment to California is conditional, transactional, and easily withdrawn when asked to contribute to the public good. Meanwhile, the 3 million Californians who stand to lose healthcare coverage do not have the luxury of relocating to a lower-tax jurisdiction.

The fissures within organized labor are perhaps the most revealing part of this story. Newsom's team has been actively recruiting unions to oppose the measure, and several have fallen in line. The California Teachers Association joined the opposition, as did law enforcement unions and unionized carpenters. Planned Parenthood Affiliates of California CEO Jodi Hicks argued the initiative "threatened to distract and divert resources from the more important task of helping Democrats retake Congress."

SEIU-UHW chief of staff Suzanne Jimenez disputed claims of growing dissent within labor, saying "the number of people who have privately resisted pressure to oppose the billionaire tax is far greater than the small number who have opposed it." But sources familiar with the negotiations described the talks as resembling "an international treaty with nine different parties," with hospital groups, business interests, labor organizations, and lawmakers all seeking separate concessions.

The June primary delivered additional setbacks for proponents. Voters in deep-blue San Francisco rejected a separate union-backed tax on top earners. Progressive billionaire Tom Steyer, who had been the only major Democratic governor candidate to endorse the statewide measure, was eliminated from the race, depriving supporters of a top-of-the-ticket advocate. Steyer, having spent more than $200 million on his gubernatorial bid, does not plan to spend for the wealth tax either.

Newsom's opposition is consistent with his record. He has consistently rejected tax increases throughout his tenure, arguing they drive wealth out of the state and damage California's economy. In a January interview with The New York Times, he was blunt: "This will be defeated. There's no question in my mind. I'll do what I have to do to protect the state."

But the language of protection is worth examining. Protect the state from what exactly? From asking people with more than $1 billion to pay a 2 percent one-time levy? The governor's team frames this as defending working Californians, yet the actual beneficiaries of his opposition are the same billionaires who funded his campaigns and whose wealth has grown exponentially during his time in office.

Rep. Ro Khanna put it more directly when he challenged Newsom: "Whose side are you on?" It is a question that cuts to the core of Democratic governance in an era of extreme inequality. The party's base wants redistribution. Its donors want protection. Newsom has chosen the donors every time.

The June 25 deadline for withdrawing the initiative from the ballot looms, but sources say pessimism is growing around any last-minute deal. Even if it goes forward to November, early polling shows roughly half of voters in favor, with significant concern about wealthy residents leaving the state. That is not a strong position for a ballot measure, and support nearly always dwindles as elections approach.

The question is not whether Newsom will succeed in blocking the billionaire tax. The question is what his success costs him politically when working Californians lose healthcare coverage and ask themselves why their governor would rather negotiate with billionaires than let them pay.

A Democratic party that refuses to stand for the working class has no business claiming it represents them.