Gov. Gavin Newsom appears to be trying on a new political identity these days: economic populist.
Since the start of the year, he has called for cracking down on corporate investors buying up single-family homes — an idea that has found support from both socialist lawmakers and President Donald Trump. Last month, after failing to keep a billionaire tax measure off California’s November ballot, he pivoted to pitching a national tax on the ultra-wealthy instead. And just last week, speaking before a gathering of Latino policymakers in Los Angeles, he warned that artificial intelligence threatens to upend the American workforce and called for “democratizing” the economy in response.
The shift comes as Newsom, term-limited and widely expected to run for president in 2028, positions himself ahead of what could be a defining national conversation about wealth inequality and AI’s disruption of jobs.
“The old bargain is dead, and AI is going to finish it off,” Newsom told the crowd, referring to the once-common expectation that a working-class job could support a family. “We need to wake up to that foundational reality.”
It’s an unfamiliar role for a governor who has never been known as a populist and who has maintained close ties to wealthy tech donors — many of whom strongly oppose Proposition 40, the state’s billionaire tax measure headed to voters this fall. Throughout his time in Sacramento, Newsom has cultivated an image as a mainstream progressive: supportive of higher taxes on top earners and an expanded safety net, but wary of full-throated redistribution politics. He has resisted most new tax proposals and defended corporate tax breaks that many on the left have wanted eliminated for years.
By zeroing in on AI’s economic fallout, Newsom appears to be staking out a signature issue for a potential presidential run. Whether voters embrace his proposed remedies remains an open question.
“Newsom is balancing two pressures,” said Kevin Liao, a Democratic strategist who worked on billionaire Tom Steyer’s unsuccessful “tax the rich” campaign for governor this year. “There’s a desire to meet the demands of his constituents and the current appetite to be against billionaires, and to address the massive wealth inequality in the state and the country, with the cold political reality that much of his career and presumably his future ambitions have also been built on the financial support of a lot of wealthy folks in Silicon Valley.”
**Multiple tax measures crowd the November ballot**
Back home, Newsom’s vocal opposition to Proposition 40 could create confusion for California voters, who will find several competing tax measures on their November ballots.
Proposition 3, backed by the California Teachers Association, would make permanent the state’s higher income tax rates on the top 2% of earners — money that flows into the general fund, with roughly 40% going toward public schools. Voters first approved those higher rates in 2012 under then-Gov. Jerry Brown and extended them again in 2016. Should they expire as scheduled in 2030, the state could lose between $5 billion and $15 billion annually.
Early polling suggests Prop. 3 has broad support, but CTA President David Goldberg acknowledged that campaigning for it will be complicated with a competing tax measure also on the ballot. The union opposes Proposition 40 in part because its revenue would largely fund healthcare rather than education.
Voters will also weigh in on two additional tax-related measures backed by tech billionaires aimed at undercutting Prop. 40, along with a separate measure from an anti-tax group that would make it harder for cities to raise local taxes.
“It’s always hard when you have a bunch of things” on the ballot, Goldberg said. “It is going to mean that we have to really go out there and make the case for this.”
Asked whether his opposition to the billionaire tax could complicate support for Prop. 3, Newsom told reporters, “I hope that’s not the case. … It’s a legitimate question.”
**A carefully managed image**
For years, Newsom has pushed back against California’s reputation as a high-tax state, often arguing on national platforms — including Fox News — that lower- and middle-income residents actually pay more in taxes in states like Texas and Florida once sales and property taxes are factored in. His argument draws on research from the left-leaning Institute on Taxation and Economic Policy, which found that states without income taxes rely more heavily on regressive taxes that hit lower earners harder.
“He taxes low-income workers more than we tax millionaires and billionaires in the state of California,” Newsom said of Florida Gov. Ron DeSantis during a televised 2023 debate hosted by Sean Hannity.
Critics counter that such comparisons ignore the substantially lower cost of housing and goods in those states.
“California is a high-tax state,” said Jared Walczak, a senior fellow at the right-leaning Tax Foundation. “A state like California can get away with higher rates than some other states because the state has so much to offer. … It doesn’t mean there isn’t a tipping point.”
As his tenure winds down, Newsom continues to point to programs made possible by California’s tax structure — free school meals and subsidized child care among them. At the same time, he frequently urges legislative Democrats not to be “profligate” with spending, and he touts the fact that he has never raised broad-based taxes during his eight years in office, even as critics note he has trimmed corporate deductions and, just this month, signed a law raising taxes on health insurance plans.
When lawmakers have pushed new revenue proposals amid budget shortfalls over the past three years, Newsom has consistently blocked them.
“We have among the highest tax rates in the United States of America for high-wage earners, we have among the highest tax rates … for corporate taxes,” he said in 2024. “I feel strongly that we have to live within our means.”
This year, some Democrats sought to tax corporations whose low-wage employees rely on public healthcare programs; Newsom agreed only to have the state study the idea further.
**A political balancing act**
His stance on the state billionaire tax follows a similar pattern. Alongside allies such as Planned Parenthood, Newsom argues that ultra-wealthy Californians could simply relocate their assets elsewhere — as Google co-founder Sergey Brin and others have already done. Yet early polling shows a narrow majority of Californians favor the measure.
Newsom reportedly pressed SEIU United Healthcare Workers West to abandon the initiative in exchange for concessions. When that effort failed, he shifted his focus toward a federal wealth tax proposal, echoing ideas long championed by progressives such as Sen. Elizabeth Warren.
His federal plan calls for a minimum tax on incomes above $100 million, reversing 2017 corporate tax cuts, raising inheritance taxes, and closing loopholes that allow wealthy individuals to borrow against unrealized capital gains without paying income tax. He has also voiced support — without offering specifics — for a public fund that would use AI-generated wealth to help displaced workers.
Sacramento-based Republican strategist Rob Stutzman said the pivot risks looking inconsistent to voters.
“He’s never banged this drum … he’s a big spender but not a big taxer,” Stutzman said. “This whole jiu-jitsu he has to do to oppose the [billionaire] tax in his state and then support it federally, it doesn’t sound as authentic as others might sound on the soapbox at the Iowa State Fair.”
**AI anxiety cuts across party lines**
Newsom’s populist rhetoric also opens him to attacks from Republicans eager to tie Democratic tax proposals to broader accusations of socialism.
“Most Democrats have the foresight to tie their tax hikes to a far-left policy, but Newsom just wants to take your money because he wants to take your money,” said Nicholas Poche, a spokesperson for the Republican National Committee, accusing the governor of trying to appeal to both progressives and establishment Democrats simultaneously.
Still, strategists note that anxiety over AI’s economic impact resonates across the political spectrum in a way that traditional wealth-tax debates do not.
“A wealth tax is more simplistic and falling along ideological lines,” Liao said. “If we’re talking about broad societal change, it is much more than wealth redistribution. It is something that’s going to touch every single person.”
Surveys show more than half of Americans fear AI could cost someone in their household a job — a worry now spreading even among tech industry workers. Meanwhile, anticipated public offerings from AI giants like OpenAI and Anthropic are expected to further concentrate the nation’s wealth. Currently, the top 10% of Americans hold nearly 70% of the country’s wealth, while the bottom half hold just 2.5%.
Other political figures are wrestling with the same issue. Former Chicago Mayor Rahm Emanuel, a moderate Democrat weighing a presidential bid, has floated stricter AI regulations and openness to basic income support for displaced workers. Sen. Bernie Sanders has proposed a national sovereign wealth fund financed by a 50% tax on AI companies, effectively making the public a stakeholder in the technology’s profits. Even Vice President J.D. Vance has weighed in, telling a podcast host recently that his greatest worry about AI isn’t job losses but the erosion of “social harmony” driven by widening inequality.
“If you make rich people way richer, you are going to have significant problems,” Vance said. “That is one of the consequences that I see from AI.”
He added that Trump is broadly receptive to Sanders’ proposal, even as the president maintains close relationships with numerous tech industry leaders.
Despite Newsom’s newfound rhetoric, some progressives remain cautious. Lorena Gonzalez, head of the California Labor Federation, said she welcomes his attention to AI-driven inequality but wants to see stronger action limiting AI’s use in the workplace and preventing mass layoffs. Newsom has so far resisted calls for aggressive regulation or outright bans on the technology.
Earlier this year, Gonzalez warned Newsom during appearances alongside labor leaders in key presidential primary states that unions may withhold political support unless he takes a firmer stance.
“It’s not enough to say, ‘I feel your pain,’” Gonzalez said. “We don’t think that catastrophic job loss is inevitable.”
Original source: CalMatters
