Politics
A Devastating Trade Spat With China Shows Few Signs of Abating
President Trump’s rapidly escalating trade war with China has resulted in eye-watering tariffs on products exchanged between the countries and scrambled prospects for many global businesses that depend on the trade. And there is no end in sight.
The Trump administration has been waiting for the Chinese leader, Xi Jinping, to call Mr. Trump personally, but Beijing appears wary of putting Mr. Xi in an unpredictable and potentially embarrassing situation with the U.S. president.
With the two governments at an impasse, businesses that rely on sourcing products from China — varying from hardware stores to toymakers — have been thrown into turmoil. The triple-digit tariff rates have forced many to halt shipments entirely.
Trump officials have argued that the status quo with China on trade is not sustainable. Mr. Trump has rapidly ratcheted up tariffs on Chinese products, from 54 percent on April 2 to 145 percent just one week later. The Chinese government has argued that the actions are unfair and closely matched his moves, raising its tariffs on American goods to 125 percent on Friday.
But on Friday night, the administration created a significant carve out to its tariffs on China when it exempted some electronics, including smartphones, laptops and televisions. Those products will still be subject to other tariffs that Mr. Trump has put in place, like a 20 percent fee he added to Chinese goods in response to the country’s role in the fentanyl trade.
Mr. Trump has said he would like to speak with Mr. Xi, but he has stopped short of requesting a phone call, believing that it is the Chinese government’s turn to ask for such a call, according to people familiar with the matter. Trump officials say that dozens of countries have reached out to the administration about negotiations since the levies were imposed. China did not, and instead responded with harsh words and tariffs of its own.
Across the Trump administration, some officials are concerned that the trade war could soon escalate into a national security crisis, potentially causing the Chinese to move up plans for a military invasion of Taiwan.
The Pentagon is assessing the impact of China potentially cutting off rare earth exports to the United States and possibly blocking certain critical components used in U.S. weapons systems, according to a person with knowledge of the preparations. The aim is to fully ascertain what harm the Chinese could inflict on America’s ability to produce and maintain certain weapons and ammunition.
Mr. Trump continues to express optimism, saying that he has always gotten along with Mr. Xi and that “something positive” will come out of the relationship. But analysts have suggested that the situation may already have spiraled out of control.
Julian Evans-Pritchard, the head of China economics for the research firm Capital Economics, said the fact that the Chinese authorities had repeatedly matched U.S. tariff hikes suggested that they were in no rush to negotiate.
“A partial rollback of tariffs still seems likely at some point,” he said. “But it is hard to envisage a meaningful reset in the U.S.-China relationship.”
At a briefing on Friday, Karoline Leavitt, the White House press secretary, declined to say whether the countries were in communication.
“I’m not going to comment on communications that are happening, or may not be happening, or either way, we’ll leave it to our national security team to get these discussions underway,” she said. She said the president was optimistic, and that he had “made it very clear he’s open to a deal with China.”
Speaking last week at the White House, Mr. Trump said that “China wants to make a deal. They just don’t know how quite to go about it.” He added that the Chinese were “proud people.”
Mr. Trump’s moves have taken tariffs to a level far past what would be prohibitive for trade, creating crises for many American businesses that depend on imports from China.
Rick Woldenberg, who runs Learning Resources, an Illinois-based maker of educational toys, said the latest tariffs had already forced him to pause some shipments from China. He called the rates that Mr. Trump had imposed “a joke” and said that even concessions from his suppliers could not make a dent in the fees he would owe to the U.S. government.
Learning Resources contracts with factories in Taiwan, India, Vietnam and other countries to make its products, but China is by far its biggest supplier, as it is for most toymakers. China accounted for two-thirds of all imports of toys and sporting goods to the United States last year.
Learning Resources employs about 500 people, most of them in the United States. It had planned to hire more this year to keep up with its fast-growing business, but has now abandoned some of those plans.
“We’re being asphyxiated by our very own government,” Mr. Woldenberg said.
Mr. Woldenberg said he paid about $2.3 million in tariffs and duties in 2024. This year, he would end up paying more than $100 million if sales somehow kept up with his projections from before the trade war. That’s more than he could pay if he cut every expense in the company other than base payroll.
At this point, Mr. Woldenberg said, the number hardly matters — beyond a certain level, the tariff is simply no longer something anyone in his business can afford to pay.
“He could raise it to 100 billion percent — it doesn’t matter,” he said. “It’s like a legal ban.”
Christophe Lavigne, the president of Highfield, which manufactures boats in China and the United States, said he expected to be subject to 198 percent tariffs on some of his imports, and that he has decided to simply stop his shipments for now.
He said his entire company, and the jobs of his employees and his dealers, was on the line. The pace of change was too fast and unpredictable, he added.
“We cannot adjust our production lines quickly enough,” he said. “Converting our entire supply chain in just two months is not feasible.”
Major multinational corporations have been in a better position to source products from countries besides China, but they too are reeling. Hobby Lobby, the crafting retailer, told vendors on Thursday that it was delaying shipments from China as a result of the escalating trade war, according to correspondence viewed by The New York Times.
The retailer told vendors that the back-and-forth tariffs had resulted in “a rapidly shifting and unpredictable landscape” and that it hoped diplomacy between the United States and China would “yield a more stable and balanced outcome.”
The implications of disrupting business with one of the country’s biggest trading partners have ricocheted through the economy. The dollar fell to a three-year low on Friday, while Treasury yields continued to swing. A measure of consumer sentiment also tumbled, indicating that Americans were becoming nervous about how higher tariffs might affect them.
Mr. Trump abruptly announced on Wednesday a 90-day pause on the “reciprocal” tariffs that he had unveiled the previous week on countries around the world, and which had gone into effect just hours earlier. But the threat of those tariffs, and of retaliation against U.S. exports, continues to hang over the global economy.
It remains to be seen if the United States and China might try to reach some agreement soon. People familiar with the conversations said that members of the White House National Security Council were in touch with counterparts at the Chinese Embassy, and that Cui Tiankai, the former Chinese ambassador, had held meetings in Washington and New York over the past several weeks to discuss the relationship. But there has been little sign of communication between higher-ranking officials in the Trump administration and the Chinese government.
Early in Mr. Trump’s first term, Mr. Xi flew to his Mar-a-Lago estate in Florida to meet with Mr. Trump for hours, sharing what Mr. Trump later referred to as “the most beautiful piece of chocolate cake you’ve ever seen.” But that did not stop the countries from entering into a bruising trade war. And in his second term, Mr. Trump has been even more emboldened and unpredictable.
Mr. Trump has given few indications publicly of what he wants the Chinese to do. But Trump officials say the issues are well known. In an annual report released March 31, the Office of the United States Trade Representative detailed the trade barriers that U.S. businesses face when selling abroad, dedicating almost 50 of its nearly 400 pages to China.
In recent weeks, in addition to countering Mr. Trump’s tariff threats, China has added some U.S. companies to an unreliable entity list that essentially bars them from doing business in the country. It has also imposed licensing systems to restrict exports of rare earth elements, which are essential for electric cars and other products.
On Friday, as it announced its latest increase in tariffs on American products, the Chinese government said it would not raise the rate further because it was already so high that the number no longer made any difference.
China’s Ministry of Commerce said that the United States had used tariffs “for bullying and coercion” and had ultimately become “a laughingstock.”
“If the U.S. continues its tariff numbers game, China will ignore it,” it said.
China also ratcheted up pressure on U.S. companies as it issued new regulations on Friday that will subject semiconductors made by U.S. firms overseas to higher tariffs.
The move will put pressure on companies like Intel, Global Foundries and others that have U.S. chip factories. It may also encourage chip companies to shift manufacturing out of the United States to maintain access to the Chinese market, where the bulk of global electronics are made.
Paul Triolo, a partner at the business strategy firm DGA-Albright Stonebridge Group, said that electric vehicle companies and others were trying to find alternate supplies of rare earth minerals and magnets after the Chinese restrictions last week.
Some companies will have to stop production after 30 or 60 days, depending on stockpiles and how fast they consume those materials, he said. “It is like a game of musical chairs,” he said. “We are talking to clients scrambling to find alternatives, and there are few.”
Shawn McCreesh, Maggie Haberman, Karen Weise, Tony Romm and Jonathan Swan contributed reporting.
Politics
Commentary: Behested payments aren’t illegal, but they are a problem. Especially for Newsom
After Gov. Gavin Newsom announced this week that the U.S. Department of Justice may be investigating his wife, Jennifer Siebel Newsom, media and pundits pounced on millions in charity payments he has solicited for nonprofits, including ones she is involved in.
Those donations, known as “behested payments,” aren’t illegal in California, but, long before Newsom started asking for them, many have found them unsavory — with good cause. A behest, after all, is by definition a command or at least a strong suggestion.
Anytime a politician is commanding money, regardless of the purpose, there is at least the appearance that the giver — Meta, Google, Blue Shield for example — may expect something in return.
It may seem absurd that the Trump administration could be investigating Newsom for questionable ethics, when Trump has hawked everything from crypto-coins to sneakers from the Oval Office. But the problem Newsom now faces is that behested payments are actually skeevy, and legal or not, they make an excellent target for pummeling the presidential contender. Especially because some of the charities are tied to his wife.
“The Newsom case has blown it wide open, but this has been an issue for years,” Sean McMorris told me. He’s the transparency, ethics and accountability program manager at Common Cause, a nonpartisan organization that has been raising alarms over behested payments for more than a decade.
McMorris said that while these payments don’t violate any laws, they are “ripe for abuse” because companies and people likely aren’t ponying up cash just to be good citizens. If you or I called up PG&E and asked them to give a few million to our favorite cause, I doubt we’d have much luck, even if it involved kittens, puppies or small children in need.
The entire system, McMorris points out, “doesn’t really work unless you’re shaking down people who you know need things from you as a politician.”
Jerry Brown used behested payments to get millions for charter schools he supported. Lesser luminaries such as mayors (including Antonio Villaraigosa, Eric Garcetti and Karen Bass, just to name the last three in L.A.) have used them for all kinds of stuff from jobs programs to fixing up official residences.
And it’s far from a Democratic thing. Arnold Schwarzenegger, a Republican, used them to pay for travel and after-school programs. Republican James Gallagher, who recently won a congressional seat, used them to fund computers for schools while he was in the state Legislature. Senate Minority Leader Brian Jones has raised millions, including helping to get $800,000 in donations to fund a replica of a historic ship for the maritime museum in his San Diego district.
Trump himself could be considered king of behested payments, with his corporate-paid ballroom and birthday bash.
Literally, folks, find me a politician with an itty-bitty bit of clout, and I’ll show you a trail of behested payments stretching through their pet projects. For that reason alone, it’s unlikely that California legislators will take any action to curb them, especially now when doing so would appear as a criticism to Newsom and Democrats in general.
And, to be fair, behested payments can do a lot of good. Newsom supercharged behested payments during the pandemic, raising hundreds of millions for programs to get Californians through that social disaster.
For that reason and others, not all experts find them terribly troubling. Jessica Levinson, a Loyola Law School professor with an expertise in election and governance issues, points out that money in politics is nothing new and at least behested payments are (mostly) required to be acknowledged. Anything over $5,000 and the politician has to report it to the California Fair Political Practices Commission, which keeps a public database.
That makes behested payments far more transparent than, say, dark money donations to a mysterious political action committee. And at least the money is going to a good cause, be it historical ships or computers for kids.
“I actually don’t think that they’re the evil mechanism that other people do,” Levinson said. “I mean, my feeling is like, let’s live in reality, right? People are going to want to give as much money to or close to powerful people as possible, and I think that we have a choice between money going to independent expenditure groups or political committees or going to nonprofits.”
So behested payments in and of themselves might not be much of a headache for Newsom. But some of the payments Newsom solicited went to nonprofits Siebel Newsom is involved with, and which have paid her a salary. That proximity is uncomfortable for many of us. There is no distinction for a behest given to a charity with direct ties to the politician, but maybe there should be.
Still, salaries being paid by behested payments also aren’t illegal, and it’s been done before, even by Newsom. Villaraigosa was paid through behested funds for his work as the state “infrastructure czar” back in 2022. Bass considered paying former L.A. Police Commissioner Steve Soboroff through behested-funded nonprofits for his work after the recent fires before public scrutiny pushed him to forgo the funds.
None of that is to say the Newsoms are off the hook in a federal investigation. Newsom’s office said that along with the FBI, agents from the IRS have been knocking on doors and asking questions. All of us — probably the Newsoms included — will just have to wait to see if the fine-tooth combs of the feds pick up any dirt.
If there is any lesson to be learned at this point, it’s about ambition and hubris. Behested payments are easy money for California politicians and business as usual — everyone does it. But maybe they shouldn’t. It’s not black or white.
Newsom is learning quickly what it means to have a powerful enemy like Trump, one who has shown he will use the full power of the American government for his own purposes. One who can tip the scales and slide white to gray and gray to felony.
Federal investigators do not like to come up empty-handed, and the wink-wink nature of behested payments creates just that kind of ambiguity that provides reasonable cause for investigation — a self-inflicted vulnerability that surely has every California politician nervous.
Politics
Double endorsement drama: Trump backs second candidate in red state’s GOP gubernatorial runoff
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President Donald Trump is making an 11th-hour endorsement in the final stretch ahead of Tuesday’s high-profile Republican gubernatorial runoff in solidly red South Carolina, saying he “can’t hurt one of them by only Endorsing the other.”
Trump on Friday took to Truth Social to say that he was supporting longtime South Carolina Attorney General Alan Wilson and Lt. Gov. Pamela Evette in the battle for the GOP nomination in the race to succeed term-limited Republican Gov. Henry McMaster.
“I can’t hurt one of them by only Endorsing the other, so, therefore, I am going to Endorse, for Governor of South Carolina, both Pam Evette and Alan Wilson!” Trump wrote, adding: “With either one you can’t go wrong.”
The endorsement of Wilson appears to be a move by Trump to hedge his bets, because Trump is already backing Evette, who is also supported by McMaster, a longtime top ally of the president.
The South Carolina runoff had been viewed as the latest test of Trump’s immense grip over the GOP and the power of his endorsements in Republican nominating contests.
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South Carolina Attorney General Alan Wilson announced his candidacy for governor on Monday, June 23, 2025, accompanied by his family. (Tracy Glantz/The State/Tribune News Service via Getty Images)
And his decision to back both Evette and Wilson isn’t the first time he’s made dual endorsements in the same Republican race. He was backing both Gina Swoboda and Jay Feely in next month’s Republican primary in Arizona’s 1st Congressional District before Swoboda dropped out of the congressional race to run for secretary of state.
Most famously, Trump endorsed “ERIC” in the 2022 GOP Senate primary in Missouri, where the two major candidates were Eric Schmitt and Eric Greitens. Both candidates claimed the endorsement, with Schmitt ultimately winning the nomination.
In South Carolina, Trump endorsed Evette late last month, a week and a half before the gubernatorial primary.
Evette finished on top of a crowded field of contenders in the primary election, with Wilson second. The field also included Reps. Nancy Mace and Ralph Norman, and multimillionaire businessman Rom Reddy. Since no candidate won a majority of the vote, as the top two finishers, Evette and Wilson advanced to the June 23 runoff.
Mace and Norman endorsed Wilson after failing to advance to the runoff. And Wilson was also backed a week ago by Sen. Ted Cruz, the conservative firebrand from Texas.
The runoff between Evette and Wilson has become combustible, and in Tuesday’s final debate both candidates launched personal attacks and accused each other of lying and misrepresenting their records.
Wilson has worked to contrast his tenure as attorney general with what he’s argued is Evette’s largely ceremonial role as lieutenant governor. And he has spotlighted his experience as a combat veteran, prosecutor, and the state’s top law enforcement official.
Evette has showcased herself as an outsider and a Trump-endorsed businesswoman, while casting Wilson as a career politician.
Sen. Tim Scott of South Carolina, who is supporting Wilson and has helped with fundraising, made calls on behalf of Wilson and encouraged the president’s endorsement of the state attorney general, a source familiar told Fox News Digital.
It’s been 28 years since a Democrat won a gubernatorial election in South Carolina, and the winner of the GOP runoff will be considered the clear favorite in the general election against Democratic nominee Jermaine Johnson, a state representative.
South Carolina Lt. Gov. Pamela Evette announces her bid for the Republican nomination for governor at The Smokestack at Judson Mill in South Carolina on July 14, 2025. (Joshua Boucher/The State/Tribune News Service/Getty Images)
The brute force of the president’s endorsement power has been on display in GOP primaries over the past two months, with his candidates ousting incumbents he targeted in showdowns in Indiana, Louisiana, Kentucky and Texas that grabbed plenty of national attention.
But Trump’s endorsement streak in statewide and congressional Republican primaries was snapped three weeks ago when his last minute endorsement of Republican Rep. Randy Feenstra of Iowa in the race to succeed retiring GOP Gov. Kim Reynolds wasn’t enough to propel the three-term congressman to victory.
Feenstra was narrowly edged by Zach Lahn, a businessman, farmer and former political strategist who was backed by the political wings of MAHA — the acronym for the Make America Healthy Again movement aligned with Trump Health Secretary Robert F. Kennedy Jr. — and Turning Point USA, the powerful conservative organization co-founded by the late Charlie Kirk.
Zach Lahn raises his fist in celebration after defeating his primary opponent in Iowa’s GOP gubernatorial race on Tuesday, June 2, 2026. (Zach Lahn for Governor via Facebook)
Trump rebounded a week later, as Evette finished first in the GOP gubernatorial primary and longtime Trump ally Sen. Lindsey Graham of South Carolina won a majority of the vote in the Republican Senate primary, and avoided a runoff.
Graham, who was endorsed by Trump, was facing primary challenges from five candidates, including conservative businessman Mark Lynch, who took aim at the senator over his support for the war in Iran. Lynch was backed by some MAGA leaders who have been critical of the president.
And a couple of days ago, Trump-backed candidates won two of the three top races in Georgia and Alabama, with the one setback coming against a billionaire businessman who shelled out over $100 million of his own money to boost his campaign.
Rep. Barry Moore, a House Freedom Caucus member and longtime Trump supporter who was endorsed by the president, comfortably defeated rival Jared Hudson, a former Navy SEAL sniper who was supported by some top names on the right, in solidly red Alabama’s GOP Senate runoff.
In battleground Georgia’s Republican Senate runoff, an 11th hour endorsement by Trump this past weekend helped boost Rep. Mike Collins, a MAGA champion, to victory over former college football coach Derek Dooley, who was backed by popular conservative Gov. Brian Kemp.
Collins will face Democratic Sen. Jon Ossoff in the general election in a race that’s among a handful that will likely decide if the GOP holds its slim majority in the chamber in the midterms.
Republican gubernatorial candidate Rick Jackson speaks to supporters at a campaign stop in Alpharetta, Ga., on June 14, 2026. (Paul Steinhauser/Fox News)
Jones regularly showcased his Trump endorsement, but Jackson, who launched his bid in February long after the president had endorsed Jones, repeatedly said that Trump had inspired him to run.
But in Georgia’s GOP gubernatorial runoff, the candidate Trump backed, Lt. Gov. Burt Jones, who was also endorsed by Kemp this past weekend, was defeated by Rick Jackson, who ran as an outsider.
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A Trump political operative, pointing to Tuesday’s loss by Trump-backed Jones, noted that “Rick Jackson set a record for spending in a statewide Republican primary. He spent Tom Steyer level money in a state a fraction of the size of California. That’s going to have an impact.”
And the operative, who asked to remain anonymous to speak more freely, also emphasized that “Rick bearhugged Trump. All of his ads and material was about how he’s going to be Trump’s favorite governor. So the race was not really a referendum on Trump.”
Fox News’ Luke Trevisan contributed to this report
A contentious proposal to tax California billionaires to alleviate federal healthcare cuts moved closer to landing on the November ballot this week, but efforts to defeat the measure before it reaches voters have already escalated.
The California secretary of state’s office said Wednesday that the proposal had enough valid signatures to be eligible for the Nov. 3 ballot. But discussions that have included the governor’s administration and lawmakers are underway about a potential deal that could prevent the initiative from being put in front of voters, according to people familiar with the negotiations.
Supporters have until June 25 to withdraw the initiative or go forward with placing it on the ballot. The negotiations highlight the escalating debate surrounding the billionaire tax, an idea that has divided the Democratic Party and drawn fresh opposition from healthcare and education groups. The negotiations are in flux, and the outcome remains uncertain.
The initiative would impose a one-time tax of up to 5% on taxpayers and trusts with assets valued at more than $1 billion, with some exceptions, such as property. The levy could be paid over five years. Ninety percent of the revenue would fund healthcare programs, and the remaining funds would be spent on food assistance and education programs. The proposal would cost the state’s richest residents about $100 billion if a majority of voters support it.
Backers of the proposed tax say it’s crucial to compensate for federal healthcare funding cuts, approved by President Trump and the Republican-controlled Congress, that will harm millions of the state’s most vulnerable residents. In April, supporters of the billionaire tax submitted nearly 1.6 million signatures, roughly double the number needed to qualify.
A poll released in March showed 52% of registered voters supported the billionaire tax, while 33% said they opposed it. Fifteen percent were undecided. The survey was conducted by UC Berkeley’s Institute of Governmental Studies and co-sponsored by The Times.
Opponents of the measure say the proposal is an ineffective attempt to address the long-term effects of the healthcare cuts and would harm California’s economy and budget.
The state budget in California is already largely dependent on income taxes paid by its highest earners. Because of that, revenues are prone to volatility, hinging on capital gains from investments, bonuses to executives and windfalls from new stock offerings, and are notoriously difficult for the state to predict.
The proposal already triggered a fierce debate, accentuating the divide between the rich and poor in a state that’s expensive to live in.
The Service Employees International Union-United Healthcare Workers West and other supporters of the billionaire tax say that it would raise $100 billion, offsetting federal funding cuts to healthcare as well as funding education and state food assistance. The SEIU-UHWW has spent more than $31 million qualifying the proposal for the ballot.
“David won the second round against Goliath, but healthcare workers and our allies won’t quit until we protect patients from the looming California healthcare collapse manufactured by Trump and Congress,” said Debru Carthan, a spokeswoman for the Billionaire Tax Now Coalition in a statement. The SEIU-UHWW funds the group.
But supporters face strong opposition from billionaires and influential groups with deep pockets. Tech executives and other business leaders oppose the idea and some have moved to other states. Opponents say taxing billionaires would harm California’s economy while not addressing underlying financial issues.
Campaign efforts against the proposal intensified this week with the launch of a new bipartisan coalition that’s fighting the wealth tax proposal. The group, called the Californians to Protect Funding for Schools, Healthcare and Public Safety, posted a long list of opponents that include healthcare groups, labor unions, business organizations, politicians and more.
An ad released by the group calls the wealth tax “a dangerous experiment” that could cost Californians tax revenue, send jobs out of state and cut funding. Planned Parenthood, the California School Boards Assn. and labor unions are cited in the ad as opponents.
“California can’t afford the reckless wealth tax experiment,” the ad says. The California Primary Care Assn. and California Medical Assn. are funding the coalition.
Jodi Hicks, chief executive and president of Planned Parenthood Affiliates of California, said that while the group believes that the wealthy should pay their fair share of taxes, the proposal fails to get at the root of the problem.
“We believe that this particular measure is shortsighted, doesn’t have specificity and accountability. It’s volatile,” she said.
The group wants to focus on holding Congress accountable and restoring critical funding rather than finding a “temporary solution that may do more harm,” Hicks said.
The proposal also has divided progressive politicians, including influential members of the Democratic Party. California Gov. Gavin Newsom spoke out against the billionaire tax, expressing fears that those wealthy residents would move out of the state. But U.S. lawmakers such as Rep. Ro Khanna (D-Fremont) and Sen. Bernie Sanders (I-Vt.) have backed a billionaire tax, saying the rich should pay their fair share to fund essential services.
Newsom tried to stop the proposal’s supporters from placing it on the ballot because he feared it would affect the state’s finances regardless of whether voters approved it, according to a person connected to the governor who was involved in the negotiations. After these efforts failed, the governor’s advisors sought to create a broad coalition opposing the proposal in order to weaken the union’s bargaining powers.
The union proposing the billionaire tax urged Newsom on Thursday to support a bill enacting a 2% tax on the state’s billionaires and said that if he got it approved by the state Legislature, it would withdraw its proposed ballot measure by the June 25 deadline.
Saying that Newsom has vocalized how devastating the federal healthcare funding cuts will be to California’s most vulnerable residents, a coalition funded by the union argued in an open letter that their proposed stopgap measure could prevent needless patient deaths.
“Governor Newsom, you have taken bold action when California needed it in the past,” the letter read. “This is one of those moments. The ask is clear. The timeline is tight but achievable. And the payoff — preventing widespread hospital and community clinic closures and saving patient lives — is real and immediate.”
A Newsom representative bluntly opposed the proposal.
“The Governor has been clear that he is strongly opposed to a California-only wealth tax,” said spokesperson Tara Gallegos in a written statement. “The Governor supports making the wealthiest Americans pay their fair share, but this poorly designed state-only measure will defund teachers, schools, clinics, and public safety. Changing the tax rate doesn’t change this measure’s fundamental flaws that harm working Californians.”
Business executives have already poured millions of dollars into groups that oppose the billionaire tax or are promoting alternative solutions to wealth inequality.
Tech executives, venture capitalists and business leaders have donated roughly $118 million to a nonprofit called Building a Better California, according to data on the secretary of state’s website. Most of the funding comes from Google co-founder Sergey Brin, who has given more than $82 million to the group. Executives from DoorDash, Ripple, Stripe and other companies also have contributed.
The group says it supports policies such as expanding access to affordable housing, protecting innovation, requiring government transparency and securing more stable education funding.
PayPal and Palantir co-founder Peter Thiel has contributed $3 million to the California Business Roundtable, which opposes the tax. Former Google Chief Executive Eric Schmidt donated $1 million to that group as well.
California would probably collect tens of billions of dollars from the wealth tax if it passed, but it could also lose other tax revenue, a December letter from the state legislative analyst’s office said. The office also mentioned that it’s tough to predict the exact amount the state would collect due to factors that can affect a billionaire’s wealth, such as fluctuating stock prices.
California billionaires who were residents of the state as of Jan. 1 would be affected by the ballot measure if it passes. Some wealthy residents announced plans to move out of state. On Dec. 31, venture capitalist David Sacks announced he was opening an office in Austin, Texas, the same day Thiel publicized his firm had opened a new office in Miami.
Measures that could nullify the billionaire tax are another hurdle facing the initiative’s supporters. One initiative known as the Improving Transparency, Effectiveness & Efficiency in California Government Act could cancel out the billionaire tax.
It appears likely that the transparency act will also qualify for the ballot, as its supporters have said they’ve gathered enough signatures. If voters approve conflicting ballot measures, the one with more “yes” votes would take effect.
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