A TRADE union pushing a tax on billionaires in California, the largest state in the United States, significantly scaled back its proposal on Thursday, a day after it qualified for a statewide ballot in November.

But the offer wasn’t enough to win the support of California’s Democratic Governor Gavin Newsom.

The proposal from the Service Employees International Union Healthcare Workers West to impose a one-time, 5 per cent tax on individuals whose net worth exceeds $1 billion (£740 million) has faced staunch opposition.

The union said on Thursday that it would abandon the 5 per cent tax proposal if Governor Newsom would join them in supporting a 2 per cent levy. 

The updated proposal would instead have to be passed by the legislature.

Tara Gallegos, a spokesperson for presidential hopeful Governor Newsom, said scaling it back doesn’t change its “fundamental flaws that harm working Californians.”

“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,” she said in a statement.

The tax, to be paid by those living in the state as of January 1, 2026, is meant to counter federal cuts to healthcare for low-income people with some money going to food assistance and education programmes.

“A 2 per cent one-time tax on that accumulated wealth is modest by any objective measure especially if it means keeping emergency rooms open and saving patient lives,” backers wrote in a letter to the governor.

The proposal has already divided Democrats and triggered an expensive campaign to defeat it. The proposed tax is backed by prominent progressives including Vermont Senator Bernie Sanders.

Silicon Valley tech moguls have spent millions to defeat it. Opponents also include the California Medical Association and California School Boards Association, which helped launch a committee this week urging voters to reject it if it ends up on the ballot in November.