California Governor Gavin Newsom just laid out a two-part economic proposal that pairs a federal “billionaires’ tax” with a new national public equity fund. The tax would close loopholes that let the ultra-wealthy pay lower effective rates than their employees. The fund would channel revenues into what Newsom frames as a generational opportunity: owning a piece of the AI boom on behalf of the American public.
The plan was published in a Substack essay on June 26.
What Newsom is actually proposing
The billionaires’ tax targets two specific mechanisms that wealthy individuals use to minimize their tax burden. First, tax-free lifestyle loans, where billionaires borrow against their stock holdings to fund their lives without triggering taxable events. Second, inheritance rules that allow unrealized gains to pass between generations without ever being taxed.
Newsom’s argument centers on a staggering number: a projected $124 trillion in intergenerational wealth transfers. The goal, as Newsom frames it, is straightforward: billionaires should pay at least the same effective tax rate as their workers.
