Newsom Pitches Software Tax to Raise Billions in New Revenue

California Governor Gavin Newsom is proposing a new tax on cloud-based software sales, turning to the technology sector for billions of dollars in new revenue as the state’s budget is being lifted by the artificial-intelligence boom.

The proposal, unveiled Thursday as part of the governor’s annual May budget revision, would likely affect large software vendors such as Microsoft Corp., Salesforce Inc. and Oracle Corp., as well as the growing AI software industry. It is expected to raise $1.1 billion in state and local tax revenue in the upcoming budget year and $2 billion annually in subsequent years.

The ...