After Gov. Gavin Newsom published an essay Friday explaining his opposition to California’s state-level billionaire tax and instead calling for a national billionaires’ tax (opens in new tab), Rep. Ro Khanna called a press conference to argue that it wasn’t much of a tax at all — and that the likely 2028 presidential candidate behind it represents the wrong future for the Democratic Party.

The Silicon Valley congressman, who himself is rumored to be eyeing a run for the White House in 2028, took aim at Newsom’s proposal, which he considers far less ambitious than the “Billionaire Tax” on the California ballot this November. The measure, which would impose a one-time 5% tax on the state’s roughly 250 billionaires, was officially put on the ballot on Monday. Newsom opposes it. Khanna is one of its loudest backers.

A public feud between Khanna and Newsom over how — and whether — to tax California’s billionaires is exposing a deeper fault line in the Democratic Party ahead of 2028, pitting a populist “tax the rich” wing against a more moderate, establishment wing.

“This fight is defining what type of Democratic Party we’re going to be,” Khanna said. “Are we going to be just for the donor class?” Newsom, he added, will “support taxing billionaires on a federal level,” but not “when the stakes actually matter.”

Khanna did not hold back in his criticism of Newsom and his failure to support the California, Billionaires’ Tax, “You can’t hypothetically say I support policies on a national level while ducking the fight in your own state, which is defining for the entire nation, saying, well, I don’t want to upset the billionaires in my state, so I’m just going to punt this and say hypothetically we can solve something at a federal level — when the real fight is right now, about what type of Democratic Party we want to be.”

Khanna said that voters are looking for a different response from the Democratic Party, ““People are tired of it. They’re fed up, they’re angry, they’re fed up that all of the wealth seems to be piling up in the hands of the few. They want a fundamental change in holding these tech billionaires accountable.”

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In his essay, Newsom argues that the state measure is too narrow — almost all its revenue would fund health care while leaving out schools, housing, and childcare. He also makes the case for why taxing the wealthy at the state level won’t work: Billionaires can simply move to a jurisdiction with lower taxes.

The governor’s national plan is broader. He wants a minimum tax ensuring billionaires pay at least the rate their workers do, an end to the “tax-free lifestyle loan” that lets the wealthy borrow against stock to avoid taxable income, and a rewrite of inheritance rules to prevent what he calls “a permanent American aristocracy.” Newsom also called for a return to pre-2017 corporate rates, closing offshore loopholes, and a national fund that would give every American a stake in the wealth generated by AI.

“It is time to democratize the American economy to save our democracy,” he wrote.

Khanna disputes that the plan matches the rhetoric. It isn’t much of a wealth tax at all, he argued. A 5% federal wealth tax would raise around $4 trillion over a decade, he said, while Newsom’s approach of taxing loans against assets would bring in roughly $100 billion — about one-fortieth as much. “To call that a billionaire tax is just misleading,” Khanna said.

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Asked whether Newsom’s proposal was a way to inoculate himself against charges of siding with the ultra-rich, Khanna was confident it wouldn’t work.

“Voters, especially under 45, can sniff out propaganda,” he said as he called the governor “the face and cheerleader for Garry Tan and the billionaires in trying to kill this effort.”

It’s just the latest example, Khanna said, of Democrats kowtowing to a donor class and confining their ambitions to “women’s rights and voting rights and LGBT rights” without tackling “the economic inequalities of our time.”

“Are we going to return to our roots as an FDR populist party that is going to stand for the working class,” Khanna said, “or are we going to continue to say no, we need these people’s money?” 

The opposition to the state billionaire tax is well-funded. Two counter-measures on the November ballot are designed to cancel the proposition if it passes. One would ban retroactive taxes and new taxes on personal property, and the other targets a provision that exempts the tax’s revenue from a state education-funding rule.

If a counter-measure and the tax both pass, the one with more votes usually wins, though the legal outcome is contested, so opponents aren’t just campaigning against the tax. The counter-measures are the work of Building a Better California, a committee funded largely by billionaires, including Google cofounder Sergey Brin, who has put in about $82 million and reportedly left California for Nevada over the tax proposal.

The measure has also drawn ire from an unlikely coalition of labor, medical, and housing groups, among them the California Teachers Association, the California Medical Association, Planned Parenthood Affiliates of California, and California YIMBY, who consider it poorly designed. Khanna, for his part, has been a target himself. Venture capitalists in his district backed a challenger in his primary this year.

Both Khanna and Newsom are widely expected to run for president. When a reporter suggested the rift between the two was an effort to “project daylight” between them before a presidential race, Khanna leaned in.

“It’s a gulf of difference between me and the governor, and it’s the difference between standing up for 3 million Californians who are losing health care, or standing for the billionaire class. This is a defining difference for the Democratic Party.”