California Gov. Gavin Newsom proposes federal billionaire tax and AI "public equity" fund

California Gov. Gavin Newsom is calling for a national minimum tax on billionaires and a federal fund that would give every American a stake in the wealth created by artificial intelligence, laying out a populist economic agenda in an essay published Friday on Substack. 

At the same time, Newsom, who is mulling a 2028 White House bid, announced he will vote against a billionaire wealth tax on the ballot in California this November.

His pitch for the federal tax on the nation's wealthiest is what he calls a "true minimum tax on billionaires — a modern Buffett rule — that ensures the people at the very top pay at least the tax rate their own workers pay."

"Today, the office worker can shoulder a higher tax rate than the heiress," Newsom said. "The construction worker could pay a higher rate than the developer. And the delivery driver can end up paying a higher rate than the founder of the company whose packages he delivers."

He blamed a system that grew out of "decades of loopholes written by lobbyists and upheld by politicians who knew exactly who they worked for." 

"But this system can be undone," Newsom wrote.

One day earlier, the union-backed state billionaire tax measure qualified for the California ballot. Newsom says he opposes it in part because the fight over taxing the ultrawealthy should not be one undertaken by a state, but rather, by the federal government. Because billionaires can simply relocate to avoid any single state's taxes, he argues that the battle belongs at the federal level "where this broken system was created in the first place."

A number of California-based billionaires may already be taking steps to relocate to havens like Florida in order to avoid the possible tax — Mark Zuckerberg, Larry Page and Sergey Brin are among the tech titans who have been buying homes in the Sunshine State, the Los Angeles Times reported.

Newsom also objects to the California billionaire tax because the revenues would mainly be used to fund state spending on Medicaid, and not on other needs. 

"It ignores our public schools," Newsom wrote, and said the California proposal would also overlook women's health clinics, housing and child care. 

He maintains that it's the Legislature that should be making decisions about California's budget, not a single stakeholder, "no matter how worthy the cause."

Newsom's federal billionaire tax proposal

Newsom suggests ending what he calls the "tax-free lifestyle loan" — the practice adopted by many billionaires of borrowing against stock holdings, reporting no taxable income, then passing the appreciated assets to heirs untaxed. 

He calls for rewriting inheritance rules ahead of a generational wealth transfer over the next two decades, citing a figure of $124 trillion, which he warns could lock in "a permanent American aristocracy of inherited wealth." 

Newsom would also like to see a return to corporate tax rates that were in place before the 2017 Trump tax cuts and the closing of offshore loopholes that let multinationals shift profits on paper, he said. 

He called "trickle-down economics" a 50-year-long "failed" experiment that funneled record profits into buybacks and executive pay while workers' wages stagnated.

Newsom proposes a national public equity fund that would take a major stake in the AI economy. Revenues would help fund transitions for workers displaced by AI. His plan would help fund severance, portable benefits and enhanced unemployment insurance. The broader program would underwrite universal child care, tuition-free higher education and career training, health care and an industrial policy for what he calls the "AI century."

Newsom, who is term-limited and set to leave office in January 2027, is widely viewed as an early frontrunner for the 2028 Democratic presidential nomination, and his proposals place him squarely in his party's debate over AI and economic insecurity — two of the biggest issues in this year's midterm election cycle. A YouGov/Economist survey this month found 71% of Americans — including 77% of Democrats and 68% of Republicans — said AI is developing too fast.