Bernie Sanders and Gavin Newsom become adversaries over push to tax California billionaires

LOS ANGELES (AP) — As national Democrats search for a unifying theme ahead of the fall's midterm elections, a California proposal to levy a hefty tax on billionaires is turning some of the party’s leading figures into adversaries just when Democrats can least afford division from within.

Bernie Sanders will be in Los Angeles campaigning Wednesday for the tax proposal that has the Silicon Valley in an uproar, with tech titans are threatening to leave the state. Democratic Gov. Gavin Newsom is among its outspoken opponents, warning that it could leave government finances in crisis and put the state at a competitive disadvantage nationally.

Sanders is planning a late afternoon rally near downtown, and in the past he has turned out overflow crowds in the heavily Democratic city. The Vermont senator, a democratic socialist, is popular in California — he won the 2020 Democratic presidential primary in the state in a runaway. He’s been railing for decades against what he characterizes as wealthy elites and the growing gap between rich and poor.

A large health care union is attempting to place a proposal before voters in November that would impose a one-time 5% tax on the assets of billionaires — including stocks, art, businesses, collectibles and intellectual property — to backfill federal funding cuts to health services for lower-income people that were signed by President Donald Trump last year.

Sanders wrote on the social platform X that he strongly supports the tax “at a time of unprecedented and growing wealth and income inequality.”

“Our nation will not thrive when so few own so much,” Sanders wrote.

Debate on the proposal is unfolding at a time when voters in both parties express unease with economic conditions and what the future will bring in a politically divided nation. Distrust of government — and its ability to get things done — is widespread.

The proposal has created a rift between Newsom and prominent members of his party’s progressive wing, including Sanders, who has said the tax should be a template for other states.

“The issues that are really going to be motivating Democrats this year, affordability and the cost of health care and cuts to schools, none of these would be fixed by this proposal. If fact, they would be made worse,” said Brian Brokaw, a longtime Newsom adviser who is leading a political committee opposing the tax.

Midterm elections typically punish the party in control of the White House, and Democrats are hoping to gain enough U.S. House seats to overturn the chamber's slim Republican majority. In California, rejiggered House districts approved by voters last year are expected to help the party pick up as many as five additional seats, which would leave Republicans in control of just a handful of districts.

“It is always better for a party to have the political debate focused on issues where you are united and the other party is divided,” said Eric Schickler, a professor of political science at the University of California, Berkeley. “Having an issue like this where Newsom and Sanders — among others — are on different sides is not ideal.”

With the idea of taxing billionaires popular among many voters “this can be a good way for Democratic candidates to rally that side and break through from the pack,” Schickler added in an email.

It's already trickled into the race for governor and contests down the ballot. Republicans Chad Bianco and Steve Hilton, both candidates for governor, have warned the tax would erase jobs. San Jose Mayor Matt Mahan, a Democratic candidate for governor, has said inequality starts at the federal level, where the tax code is riddled with loopholes.

Coinciding with the Sanders visit and an upcoming state Democratic convention this weekend, opponents are sending out targeted emails and social media ads intended to sway party insiders.

It’s not clear if the proposal will make the ballot — supporters must gather more than 870,000 petition signatures to place it before voters.

The nascent contest already has drawn out a tangle of competing interests, with millions of dollars flowing into political committees.

Newsom has long opposed state-level wealth taxes, believing such levies would be disadvantageous for the world’s fourth-largest economy. At a time when California is strapped for cash and he is considering a 2028 presidential run, he is trying to block the proposal before it reaches the ballot.

Analysts say an exodus of billionaires could mean a loss of hundreds of millions of tax dollars for the nation's most populous state. But supporters say the funding is needed to offset federal cuts that could leave many Californians without vital services.