California Governor Gavin Newsom is facing growing backlash over California's proposed 'billionaire tax,' with critics pointing to a little-noticed clause they say could expand the measure's reach over time.
The ballot initiative is being presented as a one-time levy on the ultra-wealthy, targeting roughly 200 California residents with a net worth above $1 billion. Under the plan, those individuals would pay a 5 percent tax on wealth above that threshold, with the option to spread payments over several years.
Supporters insist the proposal is tightly focused and cannot easily be expanded beyond that small group. But attention has turned to a section deep in the document - page 26 of the draft initiative - which outlines how the law could be amended after voters approve it.
The clause allows the California legislature to modify the measure with a two-thirds majority vote, provided any changes 'further the purposes' of the original law. On paper, that limitation is designed to prevent lawmakers from rewriting the tax entirely or broadening it beyond its stated intent. However, critics argue the wording leaves room for interpretation over what qualifies as 'furthering' those purposes.
Silicon Valley venture capitalist and former Facebook executive Chamath Palihapitiya amplified those concerns in a widely shared post on X, warning the proposal could evolve over time. 'The Billionaire Tax is actually an Everyone Tax,' he wrote, arguing that the language could allow future lawmakers to adjust thresholds, timelines or the structure of the tax without direct voter approval.
He explained to his two million followers: 'The Billionaire Tax is a new tax proposal written by four professors who don't believe in the American dream. Some of them aren't even American…go figure. Despite its name, it applies to every California resident who currently has assets or ever will. The creators named it the Billionaire Tax so you would get into a froth and wouldn't look closely at what it actually does to you. On page 26, it explains how the government can convert to an Everyone Tax without voter approval.'
His comments sparked a wave of reaction online. 'Page 26 is where things get interesting,' one user wrote, while another added: 'This is how policies start narrow and then expand over time.' Others echoed concerns about enforcement provisions within the proposal, noting that it would require affected taxpayers to calculate and report the value of complex assets - from private businesses to real estate - each year the tax is applied. Critics say that framework could, in theory, be extended more broadly if the law evolves.
Some commentators have even drawn comparisons to the Revenue Act of 1913, introduced after the Sixteenth Amendment to the United States Constitution. It initially started with a 1 percent tax on income above $3,000 (about $90,000 today), rising to a top rate of 7 percent on very high incomes. Over time, those rates expanded dramatically - peaking at over 90 percent for top earners during the 1940s–50s, and applying to a much broader share of Americans.
However, supporters of the California measure reject those comparisons, arguing that the two-thirds legislative threshold and the requirement to stay aligned with the law's original purpose act as meaningful guardrails against so-called 'mission creep.' Policy experts also note that amendment clauses and detailed reporting requirements are standard features in complex tax legislation and do not, on their own, mean a measure will be broadened.
For now, the proposal remains under debate, but the viral reaction highlights how quickly technical legal language can fuel broader concerns - especially when it comes to taxes and the potential reach of government policy. Palihapitiya, 49, who lives in Palo Alto and runs Social Capital, has been a frequent critic of Newsom in recent times. But from 2000 to 2019, Palihapitiya had supported the Democrats, and donated $1.3 million to party candidates and causes. However, in 2020 his political contributions shifted toward Republican party candidates, including donations to Vivek Ramaswamy and a $12 million Trump fundraiser in 2024.
He has slammed Newsom on multiple occasions since then, including in 2021, when Palihapitiya said the governor 'has done a terrible job'. He cited high crime rates, high taxes, poor air quality, and residents leaving the state. Then in January, Palihapitiya made a jab at Newsom once again, this time over his wealth tax, complaining that a very small group of people (the top 1 percent) already pays more in total taxes than 33 percent of the population.
