The billion-dollar tax question for candidate Newsom: Where does he stand? | Opinion
And now comes the billion-dollar political question for Gov. Gavin Newsom, one that may shape his campaign for the presidency that unofficially began this week with the qualification of a billionaires tax headed to California ballots in November.
The union-backed initiative to assess a one-time 5% tax on California billionaires means Newsom has only a matter of days to negotiate some alternative financial solution to persuade backers to keep it off the ballot.
Newsom has been quite clear that he opposes such a tax at a state level. But in reviewing his thoughts nationally, he hasn’t suggested a concrete plan on how to increase taxes on the wealthy via the federal Internal Revenue Service. Nor should he be expected to be. Newsom, so he says, isn’t yet running for president.
The hour of decision on this California billionaires tax, however, calls into question whether Newsom has meaningful and detailed thoughts about the national solution.
Don’t expect much. This is treacherous territory.
An issue outside Newsom’s wheelhouse
Going after the wealthy has never been in Newsom’s wheelhouse. Not as governor. Not as lieutenant governor. Not as San Francisco mayor. He lives in Marin, for crying out loud. It’s never comfortable to vilify the neighbors.
Newsom has gotten downright personal, seeming to feel the pain of California billionaires as they face the prospect of this one-time tax.
“I’ve met with people who feel they’re being attacked because of it,” he said in January.
“People that have no problem paying more income tax, people that literally are giving away all of their money but want to do it on the timeline that their family has approved.”
You can almost hear the violins.
Come campaign season, among Democrats, Gavin “French Laundry” Newsom will never be the most persuasive populist in the room — he of the silver spoon.
A forgotten promise
Listening to his State of the State address last January, Californians would have thought Newsom had solved the vexing problem of income inequality here in the Golden State. For here, we tax rich people the right way.
“Understanding the lessons of the past, in California, we proudly built one of the most progressive tax systems in the nation,” he said. “One that asks the highest-income residents to pay a little bit more, without punishing people who are making a little bit less.”
Missing from the Newsom stump speech is how when taking into account the high cost of living here, California has one of the highest poverty rates in the nation. Newsom hasn’t solved affordability, or lack theorf, within essentials such housing costs, fuel costs, electricity rates or property insurance. But we do tax the rich here a little bit more.
This was not the final big speech as governor about taxes that Newsom had in mind when he was first running for the job back in 2018. Back then, he made quite the heady pledge that he was about to reform California’s entire tax structure to make revenues both more reliable and equitable.
Trashing his predecessor, Jerry Brown., Newsom said at the time: “Gov. Brown had no interest in pursuing it. And I would argue there’s no greater political mind in our lifetime than Gov. Brown. So I’m not naive about this, but I am not going to neglect this issue, and I’m going to lean into it and express a desire to see if we can possibly come together across our differences.”
Newsom was naive. The comprehensive reform never happened. He never came close.
Meanwhile, when Newsom gets to Iowa for the Democratic caucuses, he will undoubtedly face candidates who think we should be taking a lot more from the wealthiest of the wealthy, not just a little. The wealthiest among us by any measurement have exploded in prosperity this century. Income disparity has never been greater in modern times. And many Democrats won’t be afraid to say precisely how they plan to address it.
Newsom is right that a new one-time tax just on billionaires makes no sense in California. But his position begs many questions. At a federal level, what should the tax bracket be for billionaires? Multi-millionaires? Should there be more of a tax on wealth as opposed to merely income?
Wherever Newsom would begin to draw these lines, he’d begin to lose neighbors as friends. And he would lose campaign donors who rightfully see him as a safer bet than someone among the vast political sea of angry populist Democrats.
If there’s a path to the White House for Newsom, it’s a tried and true one — by privately courting America’s wealthiest rather than publicly demonizing them.