The fight centers on the 2026 Billionaire Tax Act, a ballot initiative that would impose a one-time 5% levy on the assets of anyone in California worth more than $1 billion, affecting roughly 200 ultrawealthy residents. Unlike an income tax, the measure would require billionaires to tally up their total wealth and cut a big check to Sacramento if voters approve it in November.​

Labor unions and health advocates backing the measure promise tens of billions of dollars for schools, food assistance, and health programs in a state with some of the country’s starkest inequality. Supporters frame it as a one-time recalibration of the social contract, not an annual raid on the rich, and argue that the political energy behind it could serve as a template for other blue states wrestling with similar divides between wealthy coastal enclaves and working-class communities.​

Newsom’s break with the left

Newsom has responded with unusual bluntness, calling the wealth tax “bad economics” and warning that it is already driving a billionaire exodus from California even before voters weigh in. He has publicly vowed the initiative “will be defeated,” signaling he is prepared to campaign against it if it qualifies for the ballot.​

That stance places him in direct conflict with powerful players in his own party, including unions that were central to his 2021 recall survival and national progressives like Sen. Bernie Sanders, who have endorsed the tax as a model for tackling concentrated wealth. Strategists say the clash could define Newsom’s final year as governor and shape his likely 2028 presidential run, forcing him to balance his ties to tech donors with a base that increasingly sees taxing billionaires as a litmus test for serious inequality politics.​

Silicon Valley’s anxiety and escape hatch

In Silicon Valley, the proposal has triggered a full-blown panic among founders and investors who fear it will accelerate an already visible migration of capital and talent out of California. High-profile figures, including Google co-founders Larry Page and Sergey Brin, have moved to reduce their ties or residency in the state ahead of a January 1, 2026 cutoff that could make them retroactively subject to the tax if it passes.​

Business groups, boosted by millions in contributions from tech billionaires such as Peter Thiel, are pouring money into committees fighting the measure and amplifying warnings that the tax would hollow out the state’s innovation hub and shrink long-term income tax revenues. Their argument has given Newsom political cover to cast his opposition as fiscal prudence rather than donor protection, even as critics say he risks cementing California as a sanctuary for the ultrawealthy at the expense of public investment.​

The ‘anti‑Zohran’ contrast

The political contrast with Zohran Mamdani, New York City’s ascendant left-wing mayor, could not be starker. Mamdani has openly declared that “I don’t think we should have billionaires” and made higher taxes on the rich a centerpiece of his platform, pressing for new levies on millionaires and the most profitable corporations as a core “affordability agenda.”​​

Although Mamdani hasn’t backed a billionaires tax like the one proposed in California, or publicly commented on this particular ballot initiative, he campaigned on a 2% city income tax surcharge on incomes over $1 million, targeting roughly 34,000 high‑income New Yorkers. New York Gov. Kathy Hochul, an increasingly close Mamdani ally, has ruled out broad tax hikes.

To be sure, Mamdani has shown signs that his politics will be less radical in practice than they seemed on the campaign. Famously, his November White House visit with President Donald Trump shocked left and right alike, as the two seemingly opposed figures largely got along and have reportedly been texting each other since.

A party split down the middle

The California fight encapsulates a broader argument roiling Democrats over whether confronting inequality requires directly taxing accumulated wealth or prioritizing growth and investment incentives. On one side stand unions, Sanders-style progressives, and officials in the Mamdani mold who view billionaire wealth as both a moral scandal and an untapped revenue source; on the other are pro‑business Democrats like Newsom who worry that aggressive wealth taxes will backfire economically and politically.​

As signatures are gathered and money pours in from both sides, the Billionaire Tax Act is becoming more than a state-level skirmish; it is evolving into a proxy fight over the future of Democratic economic policy in the post‑Biden era. For Newsom, the gamble is clear: staking his national ambitions on the bet that a Democratic Party skeptical of billionaires will still accept a nominee who killed a billionaire tax in his own state.

The importance of affluent donors

Over the past few decades, wealth and political power have concentrated sharply at the top, with the political giving of the 100 richest Americans surging more than 100-fold since 2000 and far outpacing the rising cost of campaigns. Court decisions such as the 2010 Citizens United ruling and the growth of super PACs have enabled billionaires to spend hundreds of millions of dollars per cycle, often shaping primaries, underwriting issue campaigns, and increasingly backing Donald Trump’s GOP in 2024 and beyond.

Newsom has long been a favorite of affluent donors, drawing support from a set of elite San Francisco families — including branches of the Getty, Pritzker, and Fisher fortunes — who have collectively steered tens of millions of dollars to his campaigns over more than two decades. During the 2021 recall fight, Newsom also attracted high-profile billionaire support from Netflix co-founder Reed Hastings, and agribusiness magnates Stewart and Lynda Resnick.

If Newsom were to mount a presidential bid, many of these billionaires — especially Hastings and members of the Getty and Pritzker families — would be natural early financiers, given their long record of underwriting his rise and their alignment with his pro-business, socially liberal brand of Democratic politics. More broadly, Newsom’s ties to California’s tech and donor class, including figures like former Google CEO Erik Schmidt, who has backed him in state races, position him to tap into the same West Coast mega-donor network that has increasingly defined the Democratic Party’s financial backbone in national contests.

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.

In the early 1990s, Newsom’s career began not at a campaign office, but in a wine shop on San Francisco’s Fillmore Street called PlumpJack, a venture he launched with backing from the Getty fortune. Oil heir and composer Gordon Getty, a close family friend who once said he treated Newsom like a son—just as he had been treated similarly by Newsom’s father. In fact, to call Newsom’s father, William Alfred Newsom III, a lawyer for the Getty family would be an understatement. The future judge once hand-delivered $3 million to the Italian kidnappers of Getty’s grandson, in 1973, CalMatters reported, while noting deep ties also between the Newsom family and other San Francisco political royalty, the Browns and Pelosis.

That relationship went far beyond a single store. Getty invested in most of Newsom’s early businesses—wineries, restaurants, and hotels that steadily expanded the PlumpJack brand and turned the young entrepreneur into a multimillionaire long before he was sworn in as governor. Members of the Getty clan would later emerge as some of Newsom’s most reliable political donors, contributing hundreds of thousands of dollars to his campaigns.​ And yet Newsom’s story is not straightforwardly one of extreme wealth.

Raised by a mother with 3 jobs

After Newsom’s parents divorced when he was a toddler, he and his sister were largely raised by their mother, Tessa, a young single parent in San Francisco who, at times, worked three jobs—as a secretary, waitress, and paralegal—to support her children.​

Family members recall their mother sleeping in the dining room of a small flat and renting out a bedroom to another family to make rent, even as their father—a politically connected judge who once managed the Getty family trust—exposed the children to a very different world. Newsom has said his mother taught him everything he knows about grit and hard work, even as he navigated his own struggles with dyslexia and a school system that often left him behind.​

A wealth tax fight that cuts both ways

Those dual identities—billionaire-backed businessman and son of a hustling single mom—are colliding in California’s escalating fight over a proposed “billionaire tax.” The 2026 Billionaire Tax Act, championed by a powerful health care workers’ union, would impose a one‑time 5% levy on the assets of residents worth more than $1 billion, payable over several years and calculated on wealth held at the end of 2026.​

Supporters say the measure is aimed squarely at the kind of extreme fortunes that helped launch careers like Newsom’s, promising tens of billions for public services they argue have been starved by federal tax cuts and rising inequality. Union leaders frame it as a moral corrective: In a state where billionaires buy oceanfront compounds, working‑class Californians crowd into spare rooms like the one Newsom’s family once rented out.​

Newsom’s uneasy stance

Newsom has not embraced the proposal; he has become one of its most prominent critics. Calling the one‑time levy “really damaging,” “bad economics,” and a threat to California’s long‑term fiscal health, the governor argues a state‑level wealth tax could accelerate an exodus of billionaires and their businesses, eroding future income‑tax revenue that funds schools, health care, and social programs.​

He has said he is open to a national conversation about taxing wealth, but insists California alone cannot afford to experiment when it already relies heavily on volatile income taxes from the rich. Behind the scenes, he has lobbied union allies to abandon the initiative, warning the backlash from nervous investors—some already moving money and operations out of state—could outlast any short‑term cash infusion.​

For Newsom, the wealth‑tax battle is more than a clash of spreadsheets and slogans: It is a confrontation with his own origin story. The same billionaire class that seeded his first business and boosted his campaigns now stands in the crosshairs of a tax he says could hurt the state he governs, even as memories of a mother stringing together three paychecks shape his instincts about inequality and opportunity.​

For this story, Fortune journalists used generative AI as a research tool. An editor verified the accuracy of the information before publishing.

It’s probably the number one question people ask me when they hear I cover AI: “Will AI take my job?” That question is often followed by, “How about your job?”

Sigh. Well, so far, I’m still here. And new research from Anthropic suggests the fate of our jobs is more complicated than a simple story of humans being replaced by AI agents and robots.

In the latest installment of its Economic Index, Anthropic rolled out a new way of measuring how people actually use its chatbot Claude—what kinds of tasks they give it, how much autonomy they grant it, and how often it succeeds. The goal is to get a clearer, data-driven picture of whether AI is really making people faster at work, what sorts of tasks AI supports best and how it might actually change the nature of people’s occupations and professions.

I spoke yesterday to Anthropic economist Peter McCrory about the ongoing research, which he said the company kicked off in earnest a year ago in recognition of the fact that AI is a general purpose technology that will affect every job in some way–certainly every sector of the economy. 

AI reshapes jobs differently depending on the role

But the results are not always straightforward–at least for now. For example, the research found that AI is reshaping jobs differently depending on the role. A radiologist or therapist may find that AI can elevate their skills by taking on some of the most time-intensive tasks, allowing them to spend more time talking with patients and clients. But people in other jobs may find themselves being deskilled, or that their jobs become simpler without allowing them to devote more time to some obvious higher-level task. This could happen for jobs such as data entry workers, IT specialists and travel agents. 

In addition, human collaboration and oversight remain essential, particularly for complex work. So AI appears to increase productivity for highly-skilled professionals, rather than replacing those roles. 

McCrory said that he is hopeful that other researchers can take Anthropic’s insights to better understand the uneven implications of AI on the labor market. However, one thing is easily understood: Adoption is happening quickly – in fact, AI is spreading across the US faster than any major technology in the past century, he said. 

“In our last report that we put out in September, we documented that disproportionate use is concentrated in a small number of states,” he explained. “In this report, we see evidence that low-usage states are catching up pretty quickly.” 

Anthropic’s Claude is growing in the number of tasks it can cover

And there is no doubt that AI is getting more powerful: The research found that Anthropic’s Claude is growing in the number of tasks it can cover, with 44% of jobs now able to use AI in at least a quarter of its tasks, up from 36% in the last report. 

I couldn’t help but note that the latest research was completed before Anthropic’s latest model, Opus 4.5, debuted – and also prior to the release of Claude’s Cowork application, a general-purpose AI agent that can manipulate, read, and analyze files on a user’s computer, which just came out this week. 

“it just illustrates the broad-based applicability of this technology, and the fact that Claude is increasingly able to not just give you information, but take actions on your behalf, under your discretion and delegation,” McCrory said. “I think you might see a rise in the importance of delegation skills–there’s evidence from the academic literature that suggests that people get more value out of large language models when they have better managerial skills.” That’s also been his own experience, he added: “I find myself delegating increasingly sophisticated tasks to Claude that I might have otherwise given to a research assistant if I had one.”

When I told McCrory that I had written in last week’s Eye on AI about software developers excited about using Claude Code but depressed over reducing their role to that of a manager, he nodded sympathetically and suggested I check out other Anthropic research, developed by its societal impacts team. 

“I think the big takeaway here is that we don’t know what’s on the horizon,” he said. When I pointed out how much most of us dislike uncertainty, he emphasized that he hoped the report and the data would help researchers see the future a bit more clearly. “We’re committed to open sourcing this data,” he said, so economists and policymakers can better understand the potential is of what’s coming and how we all prepare for it. 

With that, here’s more AI news.

Sharon Goldman
sharon.goldman@fortune.com
@sharongoldman

FORTUNE ON AI

AI ‘godfather’ Yoshua Bengio says he’s found a fix for AI’s biggest risks and become more optimistic by ‘a big margin’ on humanity’s future – by Sharon Goldman

Trump triggers retail investors to dump the Magnificent Seven – by Jim Edwards

Teachers decry AI as brain-rotting junk food for kids: ‘Students can’t reason. They can’t think. They can’t solve problems’ – by Eva Roytburg

What Apple’s AI deal with Google means for the two tech giants, and for $500 billion ‘upstart’ OpenAI – by Jeremy Kahn and Beatrice Nolan

AI IN THE NEWS

Leadership drama at Mira Murati’s Thinking Machines. In a surprising leadership shake-up, two co-founders of Mira Murati’s AI startup Thinking Machines Lab — Barret Zoph and Luke Metz — announced they’re leaving the fledgling company to rejoin OpenAI, just months after departing the organization to help start the venture. According to Wired, another former OpenAI researcher, Sam Schoenholz, is also returning to OpenAI as part of the move. The departures were confirmed in an internal memo from OpenAI’s applications chief, Fidji Simo, who said the return “has been in the works for several weeks.” The turn of events represents a significant blow to Thinking Machines Lab, which had only recently raised a large seed round and recruited top talent, and underscores the intense competition for elite AI researchers in the industry.

Another blockbuster quarter for TSMC. According to CNBC and others, Taiwan Semiconductor Manufacturing Company, the world’s largest semiconductor fabricator, reported a 35% jump in profit and record revenue as demand for AI chips continues to surge. The company beat expectations on both revenue and net income, with its high-performance computing business—driven by AI and data center chips—now accounting for 55% of sales. Advanced chips of 7 nanometers or smaller made up more than three-quarters of wafer revenue, underscoring how central cutting-edge AI processors have become to TSMC’s business. 

Google Gemini introduces Personal Intelligence. In a new blog post written by Google VP Josh Woodward, the company announced the US beta launch of “Personal Intelligence” in its Gemini app–which lets users opt in to securely connect their Gmail, Photos, Search, YouTube and other Google apps to Gemini. The idea is to make the assistant more proactive and useful—combining information across emails, photos, and searches to answer questions or offer recommendations specific to your life—while keeping privacy control in the user’s hands (the feature is off by default and users choose what to connect). Personal Intelligence is initially available in the U.S. to paid subscribers, with plans to expand over time, and signals Google’s push to differentiate its consumer AI by leveraging its wider ecosystem to power more personalized AI interactions.

EYE ON AI NUMBERS

48% 

That’s how many single adults reported using AI to help draft break-up messages or boundary-setting texts, according to new research from chat assistant use.ai. 

As a result, there’s less need to “ghost” dating partners now that users can rely on AI to navigate emotionally charged conversations. Among those who used AI tools to let their dates down gently, 62% described the resulting conversations as more structured, and 39% noted fewer follow-up conflicts. 

According to the survey of 4,812 single adults across five English-language markets, the trend extends beyond dating: 27% rehearse sensitive in-person conversations with AI, while 20% use it to manage boundaries in non-romantic relationships. 

AI CALENDAR

Jan. 19-23: World Economic Forum, Davos, Switzerland.

Jan. 20-27: AAAI Conference on Artificial Intelligence, Singapore.

Feb. 10-11: AI Action Summit, New Delhi, India.

March 2-5: Mobile World Congress, Barcelona, Spain.

March 16-19: Nvidia GTC, San Jose, Calif.

April 6-9: HumanX, San Francisco.