Newsom Proposes Federal Billionaire Tax, AI Public Equity Fund

California Governor Gavin Newsom has unveiled a sweeping economic proposal calling for a federal minimum tax on billionaires and a national public equity fund that would distribute AI-generated wealth to all Americans, according to an essay published Friday on Substack.

The proposal comes as Newsom, who is term-limited and leaves office in January 2027, positions himself for a potential 2028 presidential run. In a notable twist, he announced he will vote against a billionaire wealth tax appearing on California's November ballot, arguing that tax reform must happen at the federal level.

The federal tax framework

Newsom's plan centers on what he calls a "modern Buffett rule" — ensuring billionaires pay at least the same tax rate as their employees. He pointed to current inequities where office workers can face higher tax rates than heirs, and delivery drivers may pay more than company founders.

The governor proposes ending the practice of billionaires borrowing against stock holdings to avoid reporting taxable income, then passing appreciated assets to heirs untaxed. He also calls for reforming inheritance rules ahead of what he estimates will be a $124 trillion generational wealth transfer over the next two decades, warning it could create a "permanent American aristocracy of inherited wealth."

Additional measures would restore pre-2017 corporate tax rates and close offshore loopholes that allow multinationals to shift profits on paper.

AI public equity fund

Newsom's proposal includes establishing a national public equity fund that would take a significant stake in the AI economy. Revenue from the fund would support workers displaced by automation through enhanced severance, portable benefits, and improved unemployment insurance.

The broader program would finance universal child care, tuition-free higher education, career training, and health care, positioning it as an industrial policy for what Newsom calls the "AI century."

Why it matters

The proposal arrives as AI anxiety reaches across party lines — a YouGov/Economist survey this month found 71% of Americans, including 77% of Democrats and 68% of Republicans, believe AI is developing too rapidly. Newsom's framework attempts to address both technological disruption and wealth concentration simultaneously, linking two defining economic concerns into a single policy vision. His opposition to California's state-level billionaire tax, meanwhile, reflects a pragmatic calculation: wealthy individuals can simply relocate to avoid state taxes, as several California tech billionaires including Mark Zuckerberg, Larry Page, and Sergey Brin have reportedly done by purchasing homes in Florida.

State versus federal approach

Newsom opposes California's ballot measure in part because billionaires can relocate to avoid state taxes, making federal action more effective. He also objects that the state proposal would direct revenues primarily to Medicaid rather than schools, women's health clinics, housing, or child care, and argues budget decisions should rest with the Legislature rather than single stakeholders.

The details were first reported by CBS News.