In what may very well be the final significant move of his time as governor, Gavin Newsom promised to defeat a proposed wealth tax that is increasingly dividing California Democrats.
Speaking to the New York Times, the governor – and likely 2028 presidential candidate – said, “This will be defeated – there’s no question in my mind. I’ll do what I have to do to protect the state.”
Conversely, as noted in these pages last week, Rep. Ro Khanna has emerged as the proposal’s chief backer within the political class.
Khanna – who Politico noted “has his eye” on the White House and may challenge Newsom in the primary – is pushing for a “new tech social contract” that he hopes will appeal to progressives and raise his national profile.
Notwithstanding the clash between the two Bay Area Democrats, as a state issue, the soon-to-be former governor and the congressman matter less than who succeeds Newsom, as one of the candidates may be forced to confront the controversial issue.
To that end, where the candidates stand will be critical not only in determining the fate of one of the most progressive taxes in the country, but also could have implications on the race itself.
Whether to avoid antagonizing potential donors or boxing themselves in as too far to the political left, some candidates, including Katie Porter and Eric Swalwell have largely avoided taking a hard and fast stance to this point.
However, for both Porter and Swalwell, their past statements and votes indicate likely support.
In Porter’s case, her longtime prioritization of healthcare – the tax is being pushed by a healthcare union – and progressive views make it hard to envision her opposing the proposal.
Similarly, Swalwell has a long track record of supporting ways to increase taxes on the highest earners. While in Congress, he’s backed initiatives that echo parts of the California proposal, including efforts to close loopholes which allow the ultra-rich to avoid taxes on unrealized capital gains.
Other candidates, hoping to separate themselves in an extremely crowded field have been unafraid to draw battle lines on this specific proposal, giving some insight into the deep divisions.
Among the gubernatorial candidates allied with Khanna in support of the proposal are Tony Thurmond and Tom Steyer.
Steyer’s support for higher taxes on billionaires may seem at odds with his own status as a billionaire, yet it is squarely in line with his strategy of positioning himself as a populist willing to raise his own taxes.
At the same time, Steyer is likely hoping to avoid similar issues that dogged his 2020 campaign, specifically accusations that his personal fortune made him ill-suited to address affordability and income inequality.
Echoing Steyer’s populism, state superintendent Tony Thurmond has endorsed the proposal as a way to address the “unsustainable” and “growing gap between the poor and billionaire class.”
On the other side of the debate is Antonio Villaraigosa, who has come out against the tax in similar language to Newsom.
In an interview with the Sacramento Bee, the former Los Angeles Mayor and State Assembly Speaker made clear his fears that California’s ultra-wealthy would simply leave the state should the measure pass.
As he described the situation, “The problem with the wealth tax: because of the upper income tax…and our over-regulating business climate, a lot of (billionaires) have left already. We pass that wealth tax, they’re all going. They’re mobile.”
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Newsom’s budget shows big revenue gain, but we’ve been down that path before In a reasonable world, Renee Good would still be alive Matt Fleming: A California wealth tax will do far more harm than good Susan Shelley: A reality check on Gavin Newsom’s California Democrats’ national divide is playing out in California Further, as Villaraigosa framed it, the conversation should not be on how to squeeze the marginal dollar from billionaires, but rather the state’s overreliance on tax revenues from the ultra-wealthy and seeming inability to slow an increasingly bloated budget.The impact of Villaraigosa’s outright opposition remains to be seen, particularly as one poll featured in the New York Post underscored the extremely fragile support for the proposal.
Beginning with a thin majority (55%) supporting the measure, once pro and con arguments were heard, that dropped to 41% backing the tax and 53% opposing.
Taken together, California’s political class is increasingly split on an issue that very well may grow into a headache for the entire Democratic Party.
Undoubtedly, the seven leading Democrats will soon need to refine their messaging either for or against the proposal, yet trends have already begun emerging.
Douglas Schoen is a longtime Democratic political consultant.
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