Gov. Gavin Newsom seems to understand the folly of a wealth tax in California, yet he’s suddenly pushing one for the whole nation.
Sorry, Gav — you had it right the first time: It’s bad for your state and for the country.
Newsom has opposed a California ballot measure that would slap a one-time 5% tax on residents whose net worth exceeds $1 billion.
Not even an offer from SEIU-United Healthcare Workers West, which proposed the measure, to reduce the tax rate from 5% to 2% convinced him the plan would work.
Clearly, he knows such a tax would drive billionaires out of the state, undermining California’s economy.
Indeed, the mere proposal, which got over 900,000 signatures, already has the uber-rich heading for the exits.
Google co-founder Sergey Brin moved 15 of his LLCs out of state. DoorDash co-founder Andy Fang called the levy “stupid” and said it would be irresponsible for him to stay if it passed.
Ex-Uber boss Travis Kalanick skedaddled to Austin, Texas, in December to avoid the tax.
Yet now that he’s eyeing a run for president in 2028, Newsom wants folks to believe a national wealth tax won’t push folks abroad. Big mistake.
Palantir Chairman Peter Thiel recently bought real estate in Argentina, seeking refuge in part just from Cali’s billionaire tax — even after he spent $3 million to oppose it.
Other billionaires are similarly eyeing Latin America for its lower taxes.
Felipe Silva, a Uruguay–based adviser with real-estate firm Engel & Völkers, says Uruguay is attracting the wealthy, particularly from California and New York, thanks to its its business climate and safety.
Note, too, that wealth taxes haven’t done well for nations that tried them.
Of the 12 Organization for Economic Co-operation and Development countries that imposed them in the 1990s, eight ultimately rescinded them — as government revenues fell short, their economies suffered and administrative tasks proved daunting.
In 1997, Germany declared its wealth tax unconstitutional. In 2021, the Netherlands ruled it violated European property-rights law.
Such a tax may well be unconstitutional in America, too.
As for claims about fairness: The top-earning 1% of Americans are already overtaxed, accounting for 40% of federal income taxes, while earning just 22% of income.
By comparison, the bottom half account for just 3%.
Newsom’s sudden shift may play well with Democrats’ tax-the-rich crowd, but it won’t help with anyone who understands economics — and actual fairness.
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